International Business Machines Corp, the world's largest seller of computers and related services, said second-quarter profit declined as sales of computers, semiconductors and data services slowed.
Profit from continuing operations fell to US$445 million, or US$0.25 a share, from US$2.1 billion, or US$1.17, a year earlier, the company said in a statement. Revenue slipped 5.7 percent, less than forecast, to US$19.7 billion from US$20.8 billion.
Sales in IBM's Global Services unit were less than the company expected, semiconductor sales remained sluggish, and the personal-computer unit was unprofitable after making money in the first quarter. Chief Executive Sam Palmisano, who is trimming jobs and exiting lower-profit businesses, in a statement called the quarter one of the most difficult spending environments in a decade.
"Services bookings came in a little bit light of what I would have liked, so that mutes the opportunity for a rebound in the services business in the second half," said Ken Smith, a money manager at Munder Capital Management, which holds about 200,000 IBM shares in its Munder Future Technology Fund.
The Armonk, New York-based company's shares rose as high as US$73.20, then slipped back to US$70.80, after the earnings report. They gained US$1.68 to US$70.69 in regular US trading before the release. They've dropped 42 percent this year.
Some investors said they were relieved that sales weren't worse. In each of the previous two quarters, IBM fell short of analysts' revenue estimates by US$1 billion.
"They're performing OK in a very difficult environment," said Greg Francfort, a money manager at Neuberger Berman Inc, which owns 8.76 million IBM shares .
IBM's revenue sparked optimism among Asian investors, who pushed up the shares of computer-related companies such as Hitachi Ltd, Hon Hai Precision Industry Co (
Palmisano has cut about 10,000 jobs, analysts estimate, and sold some plants and businesses to help the computer maker boost profitability. The planned sale of IBM's hard-disk drive unit to Hitachi Ltd for US$2.05 billion is being treated as a discontinued operation.
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