IBM brought its fiscal 2011 year to a close with modest gains in both revenue and net income, the company reported Thursday.
For the quarter that ended Dec. 31, IBM reported revenue of $29.5 billion, up 2 percent from the same quarter in the prior year. Net income was $5.5 billion, up 4 percent.
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"So, 2011 was another very good year for us," said Mark Loughridge, IBM senior vice president and chief financial officer, in an online presentation Thursday. "Our focus on key growth initiatives and investments in innovation are enabling us to expand into new markets and capitalize on trends like analytics and cloud."
Emerging nations continue to provide growth for the company. Collectively, the revenue for Brazil, Russia, India, and China increased 10 percent for the year. The Americas' fourth quarter enjoyed an increase in revenue of 3 percent from 2010, while Asia-Pacific revenue increased 2 percent.
For fiscal 2011, IBM reported revenue of $106.9 billion, up 7 percent from fiscal 2010. Net income was also up 7 percent, to $15.9 billion. EPS (earnings per share) for the year were $13.06, a gain of 13 percent.
With these results, the company confirmed that it was still on track to reach its goal of EPS of $20 in 2015.
However, IBM fell slightly short on analysts' expectations. Analysts estimated that the company would bring in $29.71 billion in revenue this quarter, with $5.6 billion in net income, according to a poll by Yahoo Finance. For the year, they estimated the company would bring in $107.12 billion in revenue and $13.37 billion in earnings.
This quarter's results once again reinforced how IBM is enjoying most of its growth from software and services, said Gartner Research Vice President Christopher Ambrose.
The Global Technology Services unit increased revenue by 3 percent this quarter, up to $10.5 billion, and the Global Business Services unit increased revenues 3 percent as well, to $4.9 billion. Revenue from the Software unit increased 9 percent, to $7.6 billion, and certain sets of software programs produced even stronger revenue growth. In this quarter, revenue for the WebSphere family of products increased 21 percent. Information Management software revenue increased by 9 percent, and Tivoli software revenue increased 14 percent. Revenues from Lotus software decreased by 2 percent.
A number of initiatives that the company has invested in over the past few years are starting to generate revenue for the company as well, including IBM's Smarter Commerce line of e-commerce software and services, as well as its analytics software and services, Ambrose noted. Revenue from Smarter Commerce-related offerings grew by 25 percent and business analytics offerings grew by 16 percent this quarter.
Another good area of growth for the company appears to be cloud computing. Cloud computing revenue more than tripled from 2010, Loughridge said. Ambrose, however, wanted the company to reveal more about how it defines the cloud business. "What are they really calling cloud? Is it cloud services? Is it helping other companies build cloud infrastructure? What makes up for the growth?" he asked.
Not all the business units did well this quarter. Systems and Technology revenue for the quarter was down 8 percent, to $5.8 billion. The decrease actually reflects unusually strong mainframe sales in the prior year, due to the launch of the zEnterprise 196 mainframe, which boosted revenue in the fourth quarter of 2010, Loughridge said. During this time period, System Z revenue declined 31 percent and MIPS mainframe sales slipped 4 percent, compared with 2010's fourth quarter.
In contrast, sales of IBM Power systems, also managed by Systems and Technology, grew by 6 percent for the quarter. Moreover, this sluggish quarter only slightly dampened overall yearly sales for the Systems and Technology group: The unit reported 6 percent revenue growth for all of 2011.