Jerimiah Yap
New York, NY
Technology giant IBM second quarter report surpassed expectations of market analysts and Wall Street.
IBM showed strong numbers in their hardware sales despite unimpressive revenue numbers. IBM expects that their earnings per share will climb to $15.10 by the end of the year.
Sanford C. Bernstein analyst A. M. Sacconaghi believes that IBM is not prone to the fluctuations of the market. Given that IBM is the world's top supplier of software and hardware technology, it is expected to be protected from the down market.
The New York Times reports, "In a statement, Virginia Rometty, I.B.M.'s chief executive, said the strong profit performance reflected the success of the company's 'long-term business model.' That model combines focusing on higher-margin businesses and faster-growing markets abroad with aggressive cost-cutting. The strategy has served the company well, with earnings improving steadily throughout the recession and financial crisis."
IBM's income rose by 6 percent to $3.9 billion. According to the company's chief financial officer Mark Loughridge, IBM bought back its own shares by spending $17 million. He added that, "We manage these businesses for profit and cash generation."
While IBM reported positive gains, other tech suppliers weren't as fortunate. Advanced Micro Devices (AMD, chip maker), Seagate Technology (disk drive manufacturer) and Infosys are expected to report less than stellar numbers.
According to the New York Times, IBM avoided the effect of economic downturn "winning business in fast-growing foreign markets like China, India and Brazil, and shifting more of its business to higher-profit software and services businesses. Those high-margin ventures typically build on the company's investment in research and development. I.B.M. has projects around the world to help cities and nations use computing and data-tracking to improve traffic management, energy use and policing. Revenue from such projects -- I.B.M.'s Smarter Planet initiative — increased more than 20 percent in the quarter."
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