IBM scores big in second quarter

By Bob Freund

IBM Corp.'s computer services and software businesses bulked up the firm's second quarter results, giving Big Blue one of its strongest quarterly reports in the past two years.

The world's biggest technology company reported $1.71 billion in profits, or 97 cents a common share.

IBM's sales also ballooned more than 10 percent overall, including a 23 percent boost in its biggest division. IBM Global Services generated $10.64 billion of the company's $21.63 billion in revenues for the quarter ending June 30.


The sales performance beat estimates from Wall Street analysts, as tracked by Thomson First Call.

IBM's hardware sales were down 1 percent from the same time in 2002 to $6.61 billion. The slowdown came in the personal computers and technology groups, which have been struggling in recent quarters.

The System Group's servers and storage arrays, including the Rochester-produced pSeries and iSeries computers, were up 10 percent in sales overall. The servers are said to be poised to reap the benefits from some technological advances made in recent quarters.

Meanwhile, sales of the iSeries business server rose 6 percent in the quarter from a year earlier. Sales shifted toward the top end of the line, the big "richly configured" machines, IBM chief financial officer John Joyce said during a conference call with analysts and reporters. The servers often are equipped for the Linux operating system and on-demand features.

"And we expect to see continued strength in demand as customers with older generation iSeries migrate to our current technology," he said.

The pSeries' performance was even better. Revenue jumped 20 percent from a year ago, with sales strong at both the high and low ends of the line. Production of the p630, an entry-level model manufactured in Rochester, sold out during the quarter.

The xSeries family, which relies on Intel chips, turned in a 23 percent increase in sales.

Overall, "Servers ... should continue to have very good quarters through the end of the year," Joyce said.


The Associated Press contributed to this report.

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