IBM second-quarter earnings dropped to US$1.3 billion, about US$400 million down from last year, in spite of a 4% rise in revenues to US$18.2 billion.
"This was a tough quarter, as we had expected. Our results were largely affected by a few short-term factors, particularly a sharp drop in memory prices and currency," says Louis Gerstner, IBM chairman and CEO in a statement. "Our traditional businesses are continuing to re-invent themselves and our newer businesses are showing great strength."
In particular, revenue from the IBM services business grew 23% to US$3.7 billion, while software revenues climbed 4% to US$3.2 billion. Hardware sales declined 1% while personal computer revenues increased within all market segments.
North American revenue increased 11% to US$7.8 billion and Latin American revenues grew 6% to US$786 million, but revenue from the Europe/Middle East/Africa market declined 2% while Asia-Pacific revenues did not increase. Without the effects of currency fluctuations, however, Asia-Pacific revenues would have grown 19% and European revenues by 2%.