IBM's CFO Says Corporate Hardware Refresh Fuels Growth

IBM's CFO said the company is finally benefiting from a long-awaited hardware refresh cycle that helped drive hardware revenues up 16 percent for its fiscal first quarter.

John Joyce, IBM's CFO said in a conference call with Wall Street analysts following IBM's earnings release Thursday, that the company is starting to see robust growth in its systems business as customers replace older systems. "Customers have worked off the excess capacity of the late '90s and are buying again," he said. "Their infrastructure is the oldest it's been in many years and this is a unique opportunity for growth."

IBM's software revenue for its quarter ended March 31, also jumped 11 percent to $3.5 billion lead by a 24 percent growth in WebSphere revenues. Joyce added that hardware and software revenue gains are a key indicator that a corporate IT refresh cycle is in progress.

Joyce said another positive sign of recover is that CIOs are seeing their IT budgets go up while depreciation charges on equipment are going down. "We have seen the effect of that in this quarter and going forward," he said.

Leading the charge in IBM systems growth was its pSeries UNIX business that was up 15 percent and Personal Systems, which were up 18 percent, Joyce said.He noted that IBM's PSG revenue growth was fueled in large part by strong demand for mobile products.

But despite strong hardware growth, Joyce acknowledged some hiccups. He said that iSeries revenue declined seven percent for the quarter. And he said that despite PSG's 18 percent revenue growth to $2.8 billion, personal systems lost $11 million for the period.

He said that IBM was on track to meet analysts' earnings estimates for the year.

Article appears courtesy of CRN.