NEWS19 July 2012

IBM hails analytics as core high-margin business asset

Data analytics Financials North America

US — IBM has hailed analytics as a core “high-margin” business, helping it to lift its guidance for operating earnings for 2012 and alleviate some worries about declines in IT spending due to economic woes/

The company posted second-quarter figures showing revenue totaled $25.78 billion, down 3.3% from the previous year and below analysts’ expectations of $26.28 billion.

Total company revenue is flat so far in 2012, and the recent quarter saw a slowdown in growth related to software and emerging markets, two key drivers for the company in recent quarters. In addition, services revenue slid in the period, and the hardware business continued to decline, which IBM attributed to the product cycle and tough comparisons.

However, gross margin widened to 47.6% from 46.4%, boosted in part by a stronger mix of products, such as IBM’s analytics-software offerings. Comparatively, revenue in IBM’s systems-and-technology unit, which includes its hardware business, decreased 9%.

The unit now has seen year-over-year declines for three straight quarters amid tough year-ago comparisons. IBM expects the hardware business to pick up in the latter half of the year as a new product gains traction.

“In the second quarter, we delivered strong profit, earnings per share and free cash flow growth. This performance reflects continued strength in our growth initiatives and investments in higher value opportunities,” said Ginni Rometty, IBM president and chief executive officer. “These are fundamental elements of our long-term business model.