blew up earlier this month,
were quick to tell the Street all was well in their PC divisions.
Now, Big Blue has spoken. Actually, IBM yelled out a record-setting first quarter, earning $1.5 billion, or $1.55 a share, trouncing the
consensus estimate of $1.41 a share. In the year-earlier period, the company earned $1 billion, or $1.06 a share. Revenue climbed 15% to $20.3 billion from $17.6 million a year ago.
Year-over-year earnings for IBM were up a Dell-like 46%, thanks in part to the company buying 4% of its total shares outstanding at a cost of $2.1 billion.
In after-market trading, IBM shares jumped 17 1/2, or 11%, to 189 3/8. The funk over Compaq's dismal earnings seems to be over.
"Say something negative, please," implored one money manager on Wednesday's IBM conference call, which was full of optimism and bereft of almost any kind of caution whatsoever.
IBM's closely-watched software unit grew 10% from a year ago, but the big story was the re-emergence of its hardware group, which grew 17%. It actually made money. That's in sharp contrast to IBM's 1998 fiscal year, when its PC division lost $1 billion all by itself. Even better, PC average selling prices -- bucking the trend of rivals -- were up 15% year-over-year.
Expect IBM to have $10 billion to $15 billion in online sales over the next year, Doug Maine, IBM CFO, told analysts on Wednesday's conference call. That's around 15% of its 1998 annual revenues.
"Our e-business strategy made up 1/4 to 1/3 of our business," said Maine. "We feel very good about the state of the business. Another plus was Asia, which showed 20% year-over-year revenue growth."
What is more, Maine said he did not see any signs of slowdown in the second half. "If there was anything that would even suggest a slowdown in the second half, I would point to it, but we are not seeing anything like that," said a normally cautious Maine at the end of the call. With easy comparisons from last year's weak second-quarter results, investors may not have to worry about IBM's earnings prospects until October.
The only thing to quibble about seems to be that IBM missed a chance to announce a stock split.