International Business Machines rebounded from a previous disappointment by reporting second-quarter earnings yesterday that surpassed analysts'...
BOSTON — International Business Machines rebounded from a previous disappointment by reporting second-quarter earnings yesterday that surpassed analysts’ expectations. Improvement in the services division buoyed the results.
In the quarter that ended June 30, IBM showed net profit of $1.83 billion, or $1.12 per share, compared with $1.74 billion, or $1.01 per share, in the previous year.
However, that comparison is skewed because the sale of IBM’s personal-computer division to China’s Lenovo Group closed May 1, lowering the figures IBM posted in the remaining two months of the quarter.
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Looking only at continuing operations, IBM showed a profit of $1.85 billion, $1.14 per share.
Second-quarter revenue was $22.27 billion, down 4 percent from $23.10 billion a year ago. Without the one month of sales in the PC business, revenue would have been about $21.70 billion.
Analysts surveyed by Thomson Financial had forecast earnings of $1.03 per share on revenue of $21.96 billion.
“IBM returned to form in this quarter,” Chairman and CEO Sam Palmisano said in a statement.
IBM shares fell 57 cents to close at $81.81 on the New York Stock Exchange before the earnings report. The stock jumped above $85 in after-hours trading.
The second-quarter figures included three big events that Wall Street traditionally discards when assessing a company’s performance. IBM showed a gain of $1.1 billion from the Lenovo sale and a $775 million boost from an antitrust settlement with Microsoft.
IBM also took a $1.7 billion charge to account for the elimination of up to 14,500 jobs, primarily in Europe.
The company earlier had said the job cuts would top out at around 13,000. IBM’s chief financial officer, Mark Loughridge, said about half the affected people have already left the company.
IBM’s numbers were being closely scrutinized for signs that Big Blue overcame the first-quarter problems that caused earnings of 84 cents per share, or 85 cents on a recurring basis, well short of the 90 cents in analysts’ forecasts.
At the time, some analysts said the gap would have been even bigger had IBM not misled Wall Street about the effect of expensing employee stock options. IBM said last month that the Securities and Exchange Commission was investigating.
“Not only has their business bounced back, which was expected, but above and beyond that, they appear to be doing a better job executing, and demand seems to be improving in some areas of their business,” said analyst Richard Petersen of Pacific Crest Securities.
Loughridge said analysts’ forecasts for the rest of the year “remain reasonable.”