IBM sales of services, PCs lift 1st-quarter profit 42%

Earnings of $1.47 billion top analysts' estimates


April 22, 1999|By BLOOMBERG NEWS

ARMONK, N.Y. -- International Business Machines Corp., the world's biggest computer maker, said yesterday that first-quarter profit rose a better-than-expected 42 percent on revenue from its services business and increased computer sales.

IBM earned $1.47 billion, or $1.55 a share, compared with $1.04 billion, or $1.06 a share, in the year-earlier period. The company was expected to earn $1.41 a share, the average estimate of analysts polled by First Call Corp. Revenue rose 15 percent to $20.32 billion, topping forecasts of about $19.2 billion.

IBM is benefiting from new contracts in its business of installing and running corporate computers. At the same time, its personal computer business recovered from last year's dismal first quarter, when a glut of machines forced IBM and others to slash prices. Total computer sales rose 17 percent.

"It's a blowout quarter. Hardware was especially strong," said Megan Graham-Hackett, an analyst at Standard & Poor's Equity Group.

Sales of IBM's software rose 10 percent to $2.9 billion. During the quarter, IBM passed Oracle Corp. as the biggest maker of database software.

The company's gross profit margin, or the percentage of sales left after subtracting production costs, narrowed to 35.7 percent from 36.6 percent.

IBM's share price rose $2.125 in trading yesterday to close at $171.875.

Pub Date: 4/22/99

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