IBM Beats The Street, Posts Revenue of $24.6B; Net Income Up 10 Percent To $2.9B

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Following strong fourth quarter 2010 results, IBM released first quarter earnings today, reporting $24.6 billion in revenue for the quarter which is up 8 percent (or up 5 percent adjusting for currency). Diluted earnings came in at $2.31 per share, compared with diluted earnings of $1.97 per share in the first quarter of 2010, an increase of 17 percent. Analysts expected $2.30 a share on revenue of $24.04 billion.

First-quarter net income was $2.9 billion compared with $2.6 billion in the first quarter of 2010, an increase of 10 percent. Operating (non-GAAP) net income was $3.0 billion compared with $2.6 billion in the first quarter of 2010, an increase of 13 percent.

Samuel J. Palmisano, IBM chairman, president and CEO said in a statement: “We delivered a strong first quarter with revenue growth across hardware, software and services and with more than 40 countries growing in double digits. We continued to see excellent momentum in our growth initiatives – smarter planet, cloud, business analytics, and growth markets – which bring together the full value of the IBM portfolio…We achieved broad-based margin improvement, while our cash flow and strong financial position enabled us to continue to return value to our shareholders. The company is raising its full-year 2011 outlook, expecting operating earnings per share to come in at least $13.15 from $13.00 previously expected.

The company’s total gross profit margin was 44.1 percent in the 2011 first quarter compared with 43.6 percent in the 2010 first-quarter period. In terms of The Americas’ first-quarter revenues were $10.3 billion, an increase of 9 percent (8 percent, adjusting for currency) from the 2010 period. Revenues from Europe/Middle East/Africa were $7.8 billion, up 3 percent (2 percent, adjusting for currency). Asia-Pacific revenues increased 12 percent (4 percent, adjusting for currency) to $5.9 billion. OEM revenues were $600 million, up 13 percent compared with the 2010 first quarter.

Revenues from the Software segment were $5.3 billion, an increase of 6 percent (4 percent, adjusting for currency), or 10 percent (8 percent, adjusting for currency). Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $3.3 billion, an increase of 16 percent (14 percent, adjusting for currency) versus the first quarter of 2010. Operating systems revenues of $542 million increased 9 percent (7 percent, adjusting for currency) compared with the prior-year quarter.

Revenues from the WebSphere family of software products increased 51 percent year over year. Information Management software revenues increased 13 percent. Revenues from Tivoli software increased 8 percent. Revenues from Lotus software increased 1 percent, and Rational software increased 5 percent. And revenues from the company’s business analytics operations across services and software segments increased 20 percent.

Revenues from the Systems and Technology segment totaled $4.0 billion for the quarter, up 19 percent (16 percent, adjusting for currency) from the first quarter of 2010.

IBM ended the quarter with $13.2 billion of cash on hand, which is significantly higher than the $11.7 billion left in cash in the fourth quarter of 2010. IBM hasn’t really been on much of an acquisition spree this year, buying real estate software company Tririga this year. Big Blue has known to be bullish on acquisitions so perhaps we’ll see more M&A coming from the company in the second quarter of 2011.