Troubling results from IBM and Intel

When two American high tech bulwarks post less than stellar financials it gives the market concerns.

IBM somehow managed to increase its earnings per share, but it did so on declining revenues. Big Blue was down five per cent from the third quarter in 2011. The Armonk, N.Y.-based computing power did not meet analyst expectations either. Its net income was flat at $3.8 billion.

IBM shared its sorrow with Intel as the chip maker posted revenue and profit drops in its third quarter. Intel said the main reason for the decline was in part because of the poor economy in the U.S.

Intel CEO Paul Otellini said the third-quarter results reflected a continuing tough economic environment.

According to IDC, worldwide PC sales dropped a whopping 8.6 per cent when compared to 2011 figures.

The launch this month of Windows 8 is not helping either as customers are waiting for new products from manufacturers instead of purchasing old Windows 7 hardware.

IBM Chief Financial Officer Mark Loughridge said there are many factors for the less than ideal results such as the slowdown in customer spending, big software deals did not materialize and IBM’s global services business regressed as well.

Loughridge added that the Americas region which includes Canada performed badly.

IBM Americas business dropped by 4 per cent, Loughridge said in a conference call with the financial community. Other regions such as EMEA declined from last year, while the Asia-Pac region increased revenue by just one per cent.

IBM’s software group, usually a pillar of strength for the company also saw a decline of one per cent. Hardware sales really suffered as it was down by 13 per cent. Storage revenues dropped by 10 per cent, IBM said.

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Jim Love, Chief Content Officer, IT World Canada

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