IBM's third quarter earnings jumped five percent and revenues grew nine percent over third quarter 2002, but IBM executives in the US remained cautious.
IBM's earnings hit US$1.8 billion compared with US$1.7 billion for the year earlier period while sales grew to US$21.5 billion, up from US$19.8 billion.
'Although IT spending has stabilised, it's still too early to predict a turnaround,' John Joyce, IBM senior vice-president and CTO told US analysts.
IBM chairman and CEO Sam Palmisano said in a prepared statement: 'We are beginning to see signs that the [US] economy has stabilised ... Although it is too early to say that a rebound is at hand, we are confident we will benefit from both a pickup in IT spending and an economic recovery.'
IBM's Personal Systems Group continued to drag down overall profitability, recording a US$50 million loss during the third quarter on revenue of US$2.84 billion.
Joyce said the loss was primarily in desktops. Desktop sales by unit were up eight percent, but pricing pressure cut revenues six percent. ThinkPad revenues for the period were up eight percent, he said.
'Our goal for the fourth quarter [in Personal Systems Group] is to be profitable,' he said.
Overall hardware revenues were down one percent from a year earlier. IBM fared better in its Systems Group with pSeries server sales up five percent, xSeries servers 11 percent and iSeries servers five percent over third quarter 2002.
IBM's SMB sales, mostly to accounts with 1,000 employees or fewer, earned US$4.8 billion for the period, up 16 percent on last year.
IBM's software sales grew 11 percent to US$3.5 billion for the quarter, while Global Services revenues jumped 17 percent to US$10.4 billion.
Joyce said software and services represented 65 percent of IBM's total revenue. He noted that IGS signed US$15.4 billion in outsourcing deals in the period. Overall spending was good but not robust. 'Large enterprises remain cautious,' Joyce warned.
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