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Strong dollar and weak Europe hit IBM

Simon Quicke


Twin problems of a weak Europe and a US economy in pause mode pre-election hit IBM in the last quarter with Big Blue disappointing Wall Street with lower than expected numbers.

For the third fiscal quarter IBM reported flat net income of $3.8bn and a 5% drop in revenue to $24.7bn, blaming the impact of a strong dollar for wiping off almost $1bn.

Software revenue was down by 1% and services also fell by 5% with the systems and technology turnover decreasing by 13%. The bright spots came from business analytics, which saw the numbers go up by 14% and Smarter Planet rose by 20%.

The vendor also revealed that cloud revenues have eclipsed the total earned in 2011 already with a quarter left to go.

"In the third quarter, we continued to drive margin, profit and earnings growth through our focus on higher-value businesses, strategic growth initiatives and productivity," said Ginni Rometty, IBM chairman, president and CEO.

"Looking ahead, we see good opportunity with a strong product lineup heading into this quarter and annuity businesses that provide a solid base of revenue, profit and cash," she added.

Revenues from EMEA fell by 9% to $7.2bn and the Americas also saw a decline of 4%. Even the traditionally strong BRIC countries could only muster a 4% increase.


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