IBM keeps head above water as Sun struggles

By Alun Williams

Posted on 18 Oct 2002 at 12:33

IBM pleases financial markets by meeting expectations as Sun struggles to keep up.

Big Blue has reported a profit of $1.7bn for its third quarter, which mirrors the $1.7bn for its third quarter in 2001. Sales of $19.8bn were almost similarly flat to the previous year.

'We are encouraged by the solid results the IBM team produced this quarter,' said IBM's new president and chief executive officer Samuel J. Palmisano. 'In this difficult economic environment, we delivered a good revenue performance and grew EPS. In addition, we gained share and momentum in key businesses.'

With hardware revenues decreasing, services and software are seen by IBM as key areas for future growth. 'Global Services, Storage and IBM eServers, particularly our pSeries Unix server and Intel-based xSeries line, performed well, despite the economy,' said Palmisano. 'We believe both WebSphere and DB2 gained share in a difficult software market. Microelectronics increased revenue for the first time in many quarters and cut its losses substantially.'

By way of contrast, Sun Microsystems - a big rival to IBM in the server and services market - reported a net loss of $111m for the first quarter of its 2003 fiscal year. This was based on sales revenue of $2.75bn, down from $2.86bn for the same period a year ago.

Sun now plans to cut 4,400 jobs, 11 per cent of its workforce.