The Technology Professional Services Association (TPSA) today announced that the latest findings from its Service 50 quarterly analysis of the technology industry’s financial performance have been reinforced by recent earnings guidance from technology industry leaders HP, IBM, and VMware.
Every quarter, TPSA analyzes the public financial data of 50 of the largest technology solutions providers to understand trends and performance in the technology services industry. The Q42008 report, released in late January, highlighted that technology providers fared relatively well in 2008 with top line revenues holding steady and bottom line operating incomes actually improving. TPSA predicted the key financial trends in 2009 would include pressure on product revenues, an increase in the percentage of total revenue coming from services, and stronger financial performance from companies with a blended portfolio of products and services compared to companies with minimal services revenues. Recent announcements from IBM, HP, VMware have all aligned with these predictions.
HP’s February earnings release showed top line revenues holding firm from one year ago. However, product revenues were down as services revenues increased 116% with the EDS acquisition. Services accounted for 36% of HP’s operating margin dollars. VMware product revenues increased slightly but support and professional services revenues were up 57% and 50%, respectively, from the previous year. IBM, long the standard bearer for profitable technology services businesses, has just reaffirmed its earnings-per-share outlook for all of 2009, owing in no small part to strong signings for service deals year-to-date.
"Technology services are helping to anchor the profits for companies like HP, IBM, and VMware in the current economic storm," said Thomas Lah, executive director of TPSA and author of the Service Visions industry blog. “As capital spending remains under pressure and delays product purchases, services revenues will play a crucial role in the profitability of technology providers this year.”
About TPSA
The Technology Professional Services Association (TPSA) is the first and only organization for executives who create, produce, deliver, manage, measure, and optimize technology services in the world’s leading corporations. Member companies represent a diverse group of market segments including hardware and software products, systems integration, on-demand hosted applications, and value-added solutions. More information on TPSA can be found at www.tpsaonline.com.
Contacts:
Technology Professional Services Association
Tom Rich, 978-466-5063
trich@tpsaonline.com