IBM Reports Third Quarter 1994 Earnings: Strong Growth and Signs of Transformation

Strategic Insights -

IBM announced its third quarter 1994 earnings, reporting revenues of $15.4 billion, an increase of 8.6 percent over the same period of 1993. Net earnings for the third quarter were $689 million, and earnings per common share were $1.18. Chairman and CEO Louis V. Gerstner, Jr., highlighted the company's progress in stabilizing its balance sheet and cost structure, as well as the introduction of new products such as CMOS parallel mainframes and RISC System/6000 workstations. Gerstner also noted early signs of IBM's long-term business strategies taking hold, with revenues increasing in Europe, Asia, and the United States compared to last year's third quarter.

Key Takeaways:

  • Third quarter 1994 revenues were $15.4 billion, an increase of 8.6 percent over the same period of 1993.
  • Net earnings for the third quarter were $689 million, and earnings per common share were $1.18.
  • Revenues increased in Europe, Asia, and the United States, with specific increases of 13 percent, 16 percent, and 3 percent, respectively.
  • Mainframe revenues increased for the first time since the second quarter of 1992, with shipments of mainframe capacity increasing significantly.
  • Demand exceeded supply for many of IBM's storage products, and mid-range AS/400 revenues grew by approximately 25 percent.
  • Software revenues increased 4 percent to $2.8 billion, and services revenues grew 27 percent year over year to $2.3 billion.
  • Total expenses declined 13 percent, or $700 million, compared with the third quarter of 1993.
  • IBM completed the first nine months of 1994 with cash and marketable securities of $10.8 billion, an increase of $3.7 billion since December 31, 1993.

Statistics:

  • Third quarter 1994 revenues: $15.4 billion (up 8.6% from 1993)
  • Net earnings for the third quarter: $689 million
  • Earnings per common share: $1.18
  • European revenues: $5.3 billion (up 13% year over year)
  • Asia-Pacific revenues: $2.8 billion (up 16% year over year)
  • U.S. revenues: $6 billion (up 3% year over year)
  • Software revenues: $2.8 billion (up 4% year over year)
  • Services revenues: $2.3 billion (up 27% year over year)
  • Total expenses: declined 13% (or $700 million) compared with the third quarter of 1993
  • Cash and marketable securities: $10.8 billion (up $3.7 billion since December 31, 1993)
  • Total debt: $24.3 billion (down $3 billion since December 31, 1993)

Sources:

  • (1) IBM Press Release, "IBM Reports Third Quarter 1994 Earnings," 1994
  • (1) Supplemental information provided for comparative purposes 1994 excludes effects of FSC Sale and writedown of software 1993 excludes $8.9 billion restructuring charge, SFAS 112 and FSC results (1) 1993 cumulative effect of Statement of Financial Accounting Standards (SFAS) 112, "Employers' Accounting for Postemployment Benefits."