Posted on 01/17/2006 2:40:10 PM PST by Ernest_at_the_Beach
International Business Machines ended 2005 on a high note as improved profit margins and better-than-expected bookings in its core services unit helped make up for revenues lost through the sale of the company's personal computer division.
IBM recorded net income of $3.2bn in the fourth quarter, or $1.99 a share, up from a restated $2.8bn, or $1.67 a share, a year earlier. The year-ago figures were restated to account for the cost of stock options expensing.
Revenues fell to $24.4bn from $27.7bn, following the sale of IBM's PC division to Lenovo, the Chinese computer maker. Excluding the impact of the divested PC business, revenues from continuing operations rose 3 per cent, IBM said.
IBM said its gross profit margin was 44.1 per cent in the fourth quarter, up more than 5 points from 38.8 per cent last year, before the company shed its PC business.
Samuel Palmisano, IBM's chairman and chief executive, said the margin improvements demonstrated the benefits of IBM's focus on more profitable parts of the IT industry.
"IBM's business model is much more balanced and profitable than it was just a few years ago," he said.
IBM's services business turned in a better performance than many analysts had expected, with revenues of $12bn in the quarter, down from $12.7bn one year ago but well ahead of some analysts estimates of $11bn.
Special charges including a $267m charge related to IBM's decision to freeze its defined benefit pension scheme and a $36m charge related to the expensing of stock options took a chunk out of the company's bottom line in the quarter.
Typo in the title....
LOL!
Reference not intended!
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