IBM Third-Quarter Profits Beat Estimates

Big Blue's preliminary results show a healthy bottom line in spite of sales that were virtually flat compared with the previous year.

Paul McDougall

October 9, 2008

1 Min Read
Network Computing logo

IBM said Wednesday that third-quarter earnings per share rose 22% year over year to come in at $2.05, beating Wall Street's estimate of $2.01. Revenue, however, fell short of analysts' forecasts. Sales for the quarter increased just 2%, excluding currency benefits, to $25.3 billion, falling short of the $26.53 billion average estimate.

IBM also said it's on track to meet earlier guidance on its full-year results for 2008. It reaffirmed earnings per share of at least $8.75, up 22% from the previous year.

IBM's gross profit margin for the third quarter was 43.3%, up 5% from a year ago. Pre-tax income rose 19% year over year to 3.9 billion. As of the end of the period, the company's free cash flow stood at $6.4 billion while its cash balance was $9.8 billion.

"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," said IBM chairman and CEO Sam Palmisano, in a statement.

"We remain confident in our full-year outlook," Palmisano added.

IBM released the numbers ahead of schedule, a sign that the company is anxious to signal its health to nervous financial markets. IBM plans to deliver a full earnings report on Oct. 16.

Shares of IBM were up 1.84% to $92.22 in morning trading Thursday as technology stocks led a modest rebound in the financial markets.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights