IBM Fans Feel the Pain

Hardware sales were flat, or down 2% with currency impact, from the same quarter last year. Sales of its personal systems group fell 3% to $2.27 billion, but IBM has sold that unit to China's Lenovo. That deal should close in the current quarter.

Sales of its systems and technology group totaled $3.9 billion, up 2% thanks to sales of its servers. The systems and technology group comprises IBM's mainframes, servers and storage products.

It is IBM's second-largest business group, but its growth has been lagging. However, the company has demonstrated strong momentum in servers, and it inked a significant storage deal earlier this month with Network Appliance. The first quarter is typically weak for technology hardware sales, with most in the industry pegging their hopes on increased spending in the second half of the year.

IBM's earnings include a 4-cent-a-share impact for stock-option costs and a 10-cent-a-share impact for its pension plan. Loughridge announced the change last week. Wall Street's targets were adjusted for the options impact, as were IBM's financial results for 2004.

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