IBM has increased its third quarter profits despite weaknesses in its RS/6000, AS/400 and consumer PC product lines.
But the European region showed disappointing results, with sales declining by six per cent year-on-year to $5.2 billion. In total, the company turned in profits of $1.4 billion on sales of $18.6 billion, compared to a profit of $1.3 billion in the same period last year.
Lou Gerstner, the company?s chairman and chief executive, said that services, System/390 mainframes, commercial desktops and the Lotus Notes and Tivoli software divisions showed sustained strength in the quarter.
But, he said: ?There was ongoing weakness in consumer PCs and two of our key server products, the AS/400 and the RS/6000, were undergoing major transitions.?
Gerstner added that currency fluctations had a ?significant? adverse impact on IBM?s results but that it had succeeded in increasing overall figures because of its broad and diversified product line. He also claimed that IBM?s plans to extend its electronic business in the quarter had made ?good progress?.
Sales in the US region grew by seven per cent during the period, accounting for $8.7 billion, while Asia-Pacific grew by the same percentage to $3.8 billion and Latin America by 10 per cent to $891 million.
The company said that total hardware sales were flat at $8.3 billion and so too were System/390 sales. Storage sales increased as well as revenues from the chip unit, IBM Microelectronics. Sales of IBM services increased significantly over the period, showing a 20 per cent increase from last year to $4.7 billion. Gross margins increased by two points.
Software, overall, showed a decline of two per cent, accounting for $3 billion of sales, while revenue from maintenance also dropped by 10 per cent to $1.6 billion.
The total gross profit margin for IBM in the period amounted to 38.2 per cent compared to 40.2 per cent in the same period last year.
* The IBM PC Company today confirmed that it had pulled its consumer division, which sells Aptiva PCs, back into its own structure. Sales in the US were disappointing, said Douglas LeGrande, the newly appointed general manager of the PC Co in Europe, Middle East and Africa.
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