IBM Q3 net income rises 12 percent

Strong results in emerging markets fueled the performance

IBM said Monday that third-quarter net income rose 12 percent to $3.6 billion, buoyed by strong performance in Brazil, Russia, India and China as well as solid sales of analytics software and services.

Revenue in those four countries jumped 29 percent year-over-year, IBM said. In contrast, the Americas saw a 3 percent increase in revenue to $10.2 billion, while Europe, the Middle East and Africa (EMEA) dropped 6 percent to $7.4 billion.

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Those figures suggest that emerging markets are "out of the blocks" and rebounding faster from the global recession that developed economies, CFO Mark Loughridge said during a conference call.

Total revenue was $24.3 billion, a jump of 3 percent.

Software revenue was up 1 percent to $5.2 billion. Within that group, revenue from IBM's WebSphere middleware increased 14 percent. Tivoli software sales grew 9 percent, while Lotus and Rational software sales were flat. Business analytics revenue across software and services rose by 14 percent.

Systems and Technology revenue was up 10 percent to $4.3 billion, with System x server sales jumping 30 percent and System z mainframe revenue up 15 percent. Power Systems sales fell 13 percent, however, while storage revenue grew 7 percent.

Global Technology Services revenue ticked up 1 percent to $9.5 billion, while Global Business Services segment revenues rose 5 percent to $4.6 billion.

The company signed $11 billion in service contracts in the quarter, a drop of 7 percent.

Outsourcing contract signings fell 15 percent to $5.7 billion, but would have climbed 14 percent if an agreement signed Oct. 8 had made it into the quarter, IBM said. "We're talking about eight days," Loughridge said. The contract signing drifted past the end of the quarter because its scope was expanded, he said.

IBM expects a strong fourth quarter for System z sales, thanks partly to a major new "system of systems" product release, he said.

Services and hardware sales will likely remain level next quarter, but software growth should accelerate, he added.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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