IBM posts revenue rise, predicts IT spending increase

IBM Corp.'s third-quarter revenue and income rose over last year's quarter amid signs the economy has stabilized, the company said Wednesday.

Growth in IBM's software and global services businesses offset declines in its hardware and financing units, as the company reported revenue of US$21.5 billion, 9 percent higher than last year's US$19.8 billion third-quarter total. IBM's revenue fell short, however of the US$21.9 billion consensus forecast of analysts polled by Thomson First Call. IBM met the analysts' consensus earnings expectations, with income of US$1.8 billion, totaling earnings of US$1.02 per share.

Product demand isn't yet up across the board, and it's too early to predict a rebound, but customers are expected to increase their IT investments in 2004, IBM Chief Executive Officer (CEO) Sam Palmisano said in a prepared statement accompanying IBM's financial release. IBM expects to add 10,000 new positions next year in key skill areas including services, middleware technologies, Linux, and open standards-based hardware and software, he said.

Aided by its PricewaterhouseCoopers Consulting acquisition, IBM boosted its services revenue 17 percent over last year's third quarter. With revenue of US$10.4 billion during the quarter, the unit remains IBM's largest.

Hardware, IBM's second largest division, posted a 1 percent revenue decline, to US$6.7 billion. Revenue grew slightly in IBM's systems, storage and PC groups, while it declined significantly in its technology group, from which IBM has been divesting non-core manufacturing operations.

IBM's software revenue grew 11 percent, to US$3.5 billion, with DB2, WebSphere, Lotus and Tivoli all showing growth. Lotus' 9 percent revenue growth reverses the unit's previous trend of slumping sales.

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