IBM and Microsoft both pleasantly surprised shareholders Monday with sales and profit figures for the recent quarter that came in much better than expected.
IBM's year on year profit rose 17 per cent to $1.69 million from $1.45 billion for its second quarter. Its revenue was up 16 per cent to $21.91 billion from $18.82 billion. Both figures beat even the most optimistic estimates from Wall Street analysts.
Microsoft's profit climbed 62 per cent to $2.20 billion, compared to $1.36 billion last year for its fourth quarter. Turnover climbed 39 per cent to $5.76 billion from $4.15 billion last year. The profit figure was more than 10 per cent better than analysts predicted but the company has a history of guiding estimates lower.
An upturn in sales across the board drove IBM's improved performance. Sales of computer hardware rose 22 per cent to $9.4 billion, services sales including maintenance surged 15 per cent to $8 billion and software sales grew nine per cent to $3.1 billion.
On the hardware front IBM said sales in its AS/400 business computers declined but its other business in that sector - System 390, RS/6000 and PCs - all showed year over year improvement.
The company pointed out that software sales were particularly strong, driven mostly by the database, transaction processing and Tivoli products.
With services, IBM said it signed $9.5 billion in services contracts in the quarter and ended the three months with a services contract backlog of $55.2 billion.
Geographically IBM showed growth around the world. Sales in the Americas rose 16 per cent to $10 billion; in Europe, the Middle East and Africa 14 per cent to $6.4 billion, in Asia-Pacific 19 per cent to $3.6 billion.
For Microsoft, the arrival of Office 2000 and the increasing popularity of Windows NT, were among the key drivers behind its growth spurt.
Microsoft did not break out detailed sales figures for Office 2000 but its productivity software sector showed operating revenue of $2.93 billion, up almost 48 per cent from last year's $2 billion.
The company said NT is now installed on 37 million computers, which is more than twice as many machines as a year ago. Microsoft said NT was being pre-installed on nearly one in three PCs shipped.
Geographically Microsoft too showed growth across its three regions for the quarter: South Pacific and Americas rose 48 per cent from $1.59 billion to nearly $2.36 billion; Europe, Middle East and Africa was up 33 per cent from $899 million to $1.20 billion; and Asia up 53 per cent from $372 million to $570 million.
The company also posted its full 1999 figures. It had sales of $19.75 billion for the fiscal year ended June 30, 1999, a 29 per cent increase over the $15.26 billion reported last year. Net income totalled $7.79 billion versus $4.49 billion in 1998, a staggering rise of 73 per cent.
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