Plunging hardware sales drive IBM revenue drop

IBM Corp. reported Tuesday a 19 percent decline in third-quarter 2001 net income over the year-ago period, while its revenue dropped 6 percent, to US$20.4 billion.

Hardware revenue dropped 21 percent from a year ago, a decline driven by weak PC sales, the Armonk, New York-based company said in a statement. Software revenue grew 10 percent, however, and IBM's Global Services unit reported 5 percent growth.

The quarter demonstrated an "acceleration" of a fundamental shift in buying behavior, with customers spending less on hardware and more on services and software, IBM Chairman and Chief Executive Officer Lou Gerstner said in the statement.

In one bright spot for its hardware division, sales of IBM's zSeries servers grew strongly during the quarter, Gerstner said, as customers consolidated servers into more powerful, mainframe computers.

IBM earned $0.90 per share, slightly topping analyst expectations. The consensus estimate of analysts surveyed by Thomson Financial/First Call was for earnings of $0.89 per share. The company's third-quarter net income was $1.6 billion, down from $2 billion in the year-ago quarter.

Ahead of the results, shares of IBM (IBM) ended trading Tuesday on the New York Stock Exchange down $0.15, at $101.85.

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