14 DAY TRIAL // Another technology giant announced its earnings for the second quarter after Google reported a modest growth, and that is IBM, which showed ‘above expectations’ results for Q2 and optimistically updated its forecast for 2009. International Business Machines boasted a $3.1 billion net income for Q2 2009, up 12 percent year over year, breaking down to $2.32 per share higher than the $2.02 per share analysts were predicting.
“As a result of our strategic transformation, we have a very strong business model that is delivering superior earnings, cash and client value,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer.
But while income was up revenue was actually down 13 percent to $23.3 billion since last year, showing that the cost-cutting measures the company undertook have been working. IBM has cut as much as 9,000 jobs this year and moved some of its operations overseas. To thank for the better-than-average results is also the company's focus on software and services in an economy that didn't favor hardware very well. Gross margin also rose as a result, to 45.5 percent from 43.2 percent in 2008.
However, the biggest news was the adjusted forecast for 2009, with IBM predicting bigger earnings than its previous estimates, expecting $9.70 per share for the whole year, up their previous $9.20 per share and way above analysts’ expectations of $9.15 per share in earnings. Executives were even more optimistic for the following years claiming earnings per share above $10.
“We have continued our strategic investments in Smarter Planet solutions, business analytics and next generation data centers. As a result we are optimistic about how IBM is positioned to make the most of current growth opportunities as well as those that emerge as the economy recovers. We are well ahead of pace for our 2010 roadmap of $10 to $11 per share.”