October 8th, 2008
IBM reports early. Profits up 20 percent, full year estimates reaffirmed.
IBM, surprising Wall Street today with an early release of its quarterly earnings, reported a 20 percent in net income and EPS of $2.05. The company also reaffirmed its forecast of at least $8.75 for the year, a 22 percent increase from a year ago. Samuel J. Palmisano, IBM chairman, president and chief executive officer, said in a statement:
Our results demonstrate that the combination of a steady base of recurring revenue and profits, investments for growth in emerging markets, a range of products and services that deliver value to clients, and a strong and flexible financial foundation give IBM a competitive edge in good times and tough times. We remain confident in our full-year outlook.
Mike Holland, chairman of investment company Holland & Co, who oversees assets in excess of $4 billion, including IBM, told Reuters that “In this environment, the combination of meeting current expectations but also reaffirming their outlook is an incredible performance companies. For companies to be reaffirming their outlook through the end of the year is h-u-g-e.”
Highlights from the company’s press release:
- The third quarter EPS of $2.05 is a 22 percent increase from the EPS of $1.68 in the third quarter of 2007.
- Net income of $2.8 billion. Revenue increased 5 percent, including 3 points of currency benefit, to $25.3 billion, compared with the third quarter of 2007.
- Gross profit margin in the third quarter was 43.3 percent, compared with 41.3 percent in the same quarter last year.
- IBM’s year-to-date free cash flow was approximately $6.4 billion and its cash balance was $9.8 billion.
The company said it would provide additional details in its regularly scheduled Webcast on Oct. 16. IBM closed regular trading down more than 5.3 percent at $90.55 but recovered that and more in after-hours trading, up 5.7 percent to $95.75
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
