IBM Wednesday announced fourth-quarter and year-end financial results above analysts' expectations. The company also feels comfortable with analysts' financial forecasts for fiscal 2001, according to IBM's chief financial officer.
Net income for the quarter ended December 31, 2000, was $US2.7 billion, an increase of 28 per cent on the fourth quarter of fiscal 1999, IBM said. Diluted earnings per common share were $1.48, 32 per cent up on the year-ago quarter. Eighteen analysts polled by First Call/Thomson Financial estimated that IBM would report fourth-quarter earnings per share of $1.46. IBM's fourth-quarter revenue was $25.6 billion, up 6 per cent on the year-ago quarter.
John Joyce, IBM senior vice president and chief financial officer, pronounced himself "pleased" with the company's fourth quarter results during a conference call with financial analysts. He said the solid results were an indication that "the market has continued to shift in our favour" towards services and solutions and away from being product-oriented.
IBM's services business performed very strongly in the quarter, showing double-digit growth across all its segments, Joyce said. In fact, the company has service backlogs for the quarter of $85 billion, up on the $60 billion it had at the end of the fourth quarter of fiscal 1999, he added. Demand for IBM services was especially pronounced in Japan, Joyce said.
Other IBM businesses growing strongly in the fourth quarter were mainframes, servers and middleware software. A good deal of the increase in demand came from companies increasing their use of e-business, Joyce said. "It wasn't driven by dot-com mania but by serious companies building serious (Internet) infrastructure," he added.
IBM managed to end the fourth quarter with $6.6 billion in free cashflow despite having spent over $5 billion on R&D (research and development) and more than $5.5 billion on capital expenditure during fiscal 2000, according to Joyce.