Tech Stocks: Ronna Abramson
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IBM Gets a Passing Grade
Page 3
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Earlier in the year, IBM announced plans to
lay off thousands of workers after its services division surprised
Wall Street with weak first-quarter results. Loughridge indicated on Monday
that IBM's services pipeline is continuing to grow from the just-reported
third quarter.
Analysts responded to his comments by raising earnings estimates. The consensus estimate for IBM's fourth-quarter earnings climbed Tuesday to $1.92 a share from $1.87 a share a day earlier, while analyst targets for fiscal 2006 earnings climbed to $5.62 a share from a previous target of $5.48 a share a day earlier.
Outside of the services unit, IBM's hardware sales (excluding the PC
business) rose 7% to $5.1 million, software sales increased 5.5% to $3.82
billion, and global financing sales dropped 5.8% to $600 million in the
third quarter.
IBM's hardware unit suffered from a 4% decline in mainframe sales
compared with a year ago. The company began shipping its new z9 mainframe
line in the last two weeks of the quarter; this is expected to result in
rising mainframe sales starting in the fourth quarter.
But hardware's gross margin of 40.6% was higher than anticipated, due in part to higher-than-expected yields on microprocessors for new video game consoles. IBM's microelectronics unit grew sales 14% year over year.
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