IBM-Lenovo buyout hurt sales

IBM has acknowledged that the pending sale of its PC business to Lenovo has slowed its fourth quarter sales, but claimed a 150 percent growth in blade server sales more than offset the slowdown in PCs.

For its fourth quarter ended 31 December, IBM revenues reached US$27.7 billion, a 7 percent increase over the US$24.3 billion recorded a year earlier

Earnings totalled US$3 billion or US$1.83 per share, up 12 percent from the comparable 2003 quarter profits of US$2.7 billion or US$1.59 per share.

"Full year revenue for the Personal Systems Group grew 12 percent, however, after three quarters of strong growth, revenue growth slowed to 2 percent [in the fourth quarter], " Mark Loughridge, chief financial officer at IBM said during IBM's earnings call with analysts.

"We experienced some disruption due to the Lenovo announcement which was made in the seasonally strongest month [December] of the year."

Overall hardware revenues for the quarter, however, were up 4 percent to US$9.5 billion led by a 25 percent increase in xSeries revenues and a 15 percent increase in pSeries revenues.

Loughridge said that IBM blade server sales were up 150 percent for the quarter and for the year.

IBM iSeries sales were down 9 percent during the period and storage revenues were down 11 percent, he said.

Software revenues totalled US$4.5 billion, an increase of 7 percent over fourth quarter 2003. Middleware sales, including WebSphere, DB2, Rational, Tivoli and Lotus products represented US$3.7 billion of the software revenue, up 8 percent from the year-earlier period.