IBM announces 'disappointing' first-quarter results

IBM today announced its first-quarter earnings, turning in a "good but uneven performance", according to IBM boss Lou Gerstner.

First-quarter net earnings were US$1.4 billion, excluding charges associated with software acquisitions and other items. With the added expenses, first-quarter net was US$774 million.

The results include one-time charges of US$35 million for the acquisitions of Tivoli Systems and Object Technology.

Revenues for the quarter, which ended March 31, totalled US$16.6 billion, a 5% increase from the same period last year.

Gerstner describes the company's overall hardware revenues and margins as "disappointing, mainly because of product transitions in our System/390 and AS/400 product lines."

"Very seldom do new customers want to jump immediately on to a new product," says Steve Josselyn, an analyst with International Data in Framingham, Massachusetts.

But, Josselyn says: "The 390 is in good shape, the demand seems to be solid -- a lot depends on whether IBM is able to fix the problem like it has in the past," he says. "The key element is cutting cost, which is evidence that IBM is investing more function in subsystems and pricing structures."

The company's Asia/Pacific revenues were US$3.3 billion, up 11% on the same period a year ago.

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