IBM reports 19 percent drop in third quarter earnings, stock rises on brighter outlook
Wednesday, October 17th 2001, 12:00 am
By: News On 6
NEW YORK (AP) _ Slogging ahead through a swampy global economy, IBM Corp. reported a 19 percent drop in its third quarter earnings but still managed to turn a profit.
The technology giant's hardware sales sank in the three-month period, but word of record contract signings in its Global Services division bucked up the outlook for its fourth quarter - as well its stock price.
Big Blue on Tuesday reported net income of $1.6 billion, or 90 cents per share, compared with $2 billion, or $1.08 a share, in the same quarter a year ago. Analysts had predicted earnings of 89 cents per share.
Revenue for the quarter that ended Sept. 30 reached $20.4 billion, down from nearly $21.8 billion a year ago.
Slow technology spending in the wake of the Sept. 11 terrorist attacks hurt the company's sales of storage systems and servers, business services, PCs, hard drives and microelectronics, said IBM senior vice president John R. Joyce.
The company's hardware division, which includes its battered PC business, reported a 21 percent drop in revenue. PC sales fell by 29 percent.
Joyce said the company also suffered a rapid decline in microelectronics sales, including semiconductors, which he predicted would continue to dwindle in the fourth quarter.
IBM lost several large contracts after Sept. 11 that will be delayed until the fourth quarter, Joyce said.
``These customers simply had other priorities,'' he said.
Joyce said a fourth-quarter earnings per share estimate of $1.34 was reasonable.
Geographically, the company's revenue dropped 5 percent in the Americas but grew by 4 percent in Europe and 5 percent in Asia.
The company released its results after the markets closed. Shares of IBM rose $4.15 to $106 in after-hours trading after falling 15 cents during the regular session on the New York Stock Exchange.