IBM's stock has risen 45% this year, as investors have warmed to the company's growing reputation as a recession-buster. One of the big success stories of the economic slowdown, IBM continued its margin growth in the third quarter, despite year-over-year revenue declines in most of its business units. Software led the way during the third quarter with a gross profit margin of 85.7% and the company pushed its overall margin up by almost two percentage points to 45.1%.
"Software was the key profit driver for IBM during its expansion over the past six years, and continues to drive profit growth even during the recession," wrote Allan Krans, a senior analyst at TBR, in a note released Friday. "Although IBM was outpaced in growth by more aggressive competitors such as Microsoft (MSFT) and VMware (VMW) during positive economic conditions, IBM Software is maintaining much more consistent performance during the recession."
Microsoft, in contrast, has been hit with falling sales, and VMware has seen a significant slowdown in its recent explosive growth.
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