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Software industry

IBM Reports Second-Quarter 2005 Earnings

Strategic Insights

— 1 min read

IBM announced second-quarter 2005 earnings per share of $1.14, including $0.72 per share in incremental charges related to workforce reductions, a $0.45 per share gain on the sale of its Personal Computing business, and $0.29 per share of other income due to a settlement agreement with Microsoft. Without non-recurring items, diluted earnings per share were $1.12 compared to $0.01 per share in the second quarter of 2004. Income from continuing operations was $1.85 billion, including non-recurring pretax items for restructuring charges and a gain on the sale of the PC business. Total revenues for the quarter were $22.3 billion, a 4% decrease from the same period in 2004.

Key Takeaways:

  • IBM's second-quarter 2005 diluted earnings per share were $1.14, including non-recurring items, and $1.12 without non-recurring items.
  • The company's income from continuing operations was $1.85 billion, with non-recurring pretax items of $1.7 billion for incremental restructuring charges and a $0.1 billion gain on the sale of the PC business.
  • Without non-recurring items, income from continuing operations was $0.82 billion, compared to $1.74 billion in the second quarter of 2004.
  • Total revenues for the quarter decreased 4% from the same period in 2004, with a 6% increase excluding the divested PC business.
  • IBM's five industry sectors saw revenue growth, led by double-digit growth in the Public and Distribution sectors, as well as in sales to Small and Medium Businesses.
  • Global Services revenues increased 6% to $14.3 billion, with Global Services signings totaling $14.6 billion and a services backlog of $113 billion.
  • Hardware revenues decreased 25% to $5.6 billion, excluding the divested PC business, which saw a 36% increase in eServer product sales.

Statistics:

  • Second-quarter 2005 diluted earnings per share: $1.14
  • Non-recurring items per share: $0.72 (workforce reductions), $0.45 (PC business sale), $0.29 (Microsoft settlement)
  • Income from continuing operations: $1.85 billion
  • Non-recurring pretax items: $1.7 billion (restructuring charges), $0.1 billion (PC business sale gain)
  • Total revenues: $22.3 billion
  • Revenue growth excluding divested PC business: 6%
  • Global Services revenues: $14.3 billion
  • Global Services signings: $14.6 billion
  • Services backlog: $113 billion
  • Hardware revenues (excluding PC business): $5.0 billion
  • eServer product sales growth: 36%

Sources:

  • Business Wire, July 18, 2005
  • IBM's regular quarterly earnings conference call

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