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IBM's Big Iron Makes Hay

IBM Corp. (NYSE: IBM) posted its third-quarter results last night, reporting income of $1.8 billion, up 1 percent from $1.79 billion a year ago. Earnings per share were $1.06, compared to $1.02 in 2003s third quarter.

However, the results were affected by a one-time, pre-tax charge of $320 million for the partial settlement of legal claims against IBM’s pension plan. Without the charge, IBM’s earnings would have been $1.17 per share, up on analyst predictions of $1.14.

Once again, it was IBM’s hardware business that boosted its quarterly performance. Speaking on a conference call last night, IBM CFO Mark Loughridge said that sales of zSeries and xSeries servers had been particularly strong during the third quarter, as had PC shipments.

Loughridge pointed to the high-end zSeries as evidence that mainframes are thriving. Forty years old this year, the mainframe has been repeatedly written off, much to IBM’s chagrin (see Mainframe Skills Shortage Looms and IBM Celebrates a Birthday).

Of course, IBM has good reason to keep the mainframe flag flying. The Armonk, N.Y.-based company built the first of these data center powerhouses, and it still has a significant installed base around the world. Far from being the IT equivalent of the dodo, Loughridge predicted that mainframe growth will continue into 2005.

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