IBM shrugs off economy as profits rise

 

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By Stuart Turton

Posted on 17 Jul 2009 at 15:06

IBM recorded profits of $3.1 billion in its second quarter, despite sales sliding 13%.

Big Blue's sales hit $23.25 billion during its second quarter, a 13% decline on the year earlier, as corporate spending continued to slow. However thanks to a series of cost-cutting measures including laying off staff, the company still managed to raise profits by 12.2%.

This success emboldened IBM enough to raise its full year guidance to at least $9.70 per share, from a previous estimate of $9.20.

"The full-year guidance for $9.70 was incredible," says Mike Holland, chairman of investment firm Holland & Co. "I have never seen anything like that in the years I have been following IBM. In an unpleasant economic and financial world, these are incredible results."

At the heart of IBM's success is its Software Group, which managed $5.17 billion in sales during the quarter. As with overall results this was a 7.3% drop on the year earlier but, thanks to cost cutting, was more profitable that last year.