ARMONK (dpa-AFX) - International Business Machines Corp. (IBM) said Monday after the markets closed that its second quarter profit rose 8% from last year, helped by double digit revenue growths in hardware, software and services. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. At the same time, the company raised its full year earnings forecast.
The Armonk, New York-based technology giant reported net income for the second quarter of $3.66 billion or $3.00 per share, compared to $3.39 billion or $2.61 per share for the year0ago quarter.
Excluding items, operating earnings for the second quarter were $3.78 billion or $3.09 per share, compare to $3.40 billion or $2.62 per share in the prior year quarter.
On average, 23 analysts polled by Thomson Reuters expected the company to earn $3.03 per share for the second quarter. Analysts' estimates typically exclude special items.
Gross margin for the quarter improved to 46.4% from 45.6% a year ago on a reported basis and 46.8% from 45.6% last year on an adjusted basis.
Big Blue's total revenue for the second quarter rose 12.4% to $26.67 billion from $23.72 billion in the same quarter last year. Twenty-two analysts had a consensus revenue estimate of $25.35 billion for the second quarter.
Samuel Palmisano, IBM chairman, president and chief executive officer, said, 'Hardware, software and services revenue grew at double digits, and we achieved strong profit and free cash flow growth.'
The company's global technology services group reported second quarter revenue of $10.2 billion, up 10.9% from a year earlier. Global business services group's revenue rose 8.5% to $4.9 billion in the second quarter. IBM is the world's biggest computer services firm.
The estimated services backlog at the end of the second quarter was $144 billion, up $15 billion year over year at actual rates.
IBM's software revenue rose 16.9% to $6.2 billion in the second quarter. Second quarter revenues from the company's key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, increased 21% to $3.9 billion, with WebSphere revenue up 55%.
Second quarter revenues from the company's Systems and Technology group surged 17.5% to $4.7 billion, with revenues from System z mainframe server products up 61%. IBM is the world's biggest server maker.
For the second quarter, Americas revenues grew 10% to $11.2 billion, while Europe/Middle East/Africa revenues rose 16% to $8.6 billion and Asia-Pacific revenues increased 14% to $6.2 billion. OEM revenues for the quarter were flat with last year at $674 million.
Revenues from the company's growth markets increased 23% and represented 22% of IBM's total geographic revenue for the second quarter. Revenues in the so-called BRIC countries -- Brazil, Russia, India and China -- increased 27% in the second quarter.
IBM returned $4.9 billion to shareholders through $0.9 billion in dividends and $4.0 billion of share repurchases during the second quarter, and ended the quarter with $11.8 billion of cash on hand.
Looking forward, the company raised its full year 2011 earnings guidance to at least $12.87 per share from its previous guidance of at least $12.73 per share. The company also raised its full year 2011 operating earnings guidance to at least $13.25 per share from its prior guidance of at least $13.15 per share. Analysts currently expect the company to earn $13.22 per share for the full year 2011.
Last month, IBM celebrated its 100th anniversary amid speculations about who will succeed its CEO Palmisano when he turns 60 in July. The information technology powerhouse was formed on June 16, 1911 through a merger of four companies, and was called Computing-Tabulating-Recording Co. back then. IBM now generates more than $100 billion in annual sales and has 436,000 employees worldwide.
In its 2015 roadmap, the company aims to take emerging growth countries to about 30% and software to 50%. IBM also has plans to make $20 billion worth of acquisitions between now and 2015.
IBM shares, which have traded in a range of $122.28 to $177.77 over the past year, closed Monday's regular trading session at $175.28, down 26 cents. The stock is currently gaining $3.43 or 1.96% in after hours trading.
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