Optimistic View of 2009 for IBM

There have been so many dire warnings coming left and right regarding the fourth quarter earnings, but the quarterly and year-end announcements made by IBM last Tuesday was actually on the positive side. It was a breath of fresh air to note, even if there were indeed a couple of dips that happened in the fourth quarter reports of business. Ending on December 31, 2008, IBM reported their fourth quarter revenue to be at around twenty seven billion dollars. This was actually a six percent decrease (adding one percent when one has to adjust for the currency) based on the fourth quarter of the year 2007.

Great Figures Reported by the Computer Company

For the entire year, IBM had posted a record revenue totaling to one hundred three point six billion dollars, which was a five percent increase (or, when adjusted for currency, two percent). It also posted a record of pre-tax profit to be at around sixteen point seven billion US dollars as well as a net income of around twelve point three billion. This figure would be at eight dollars and ninety three cents in terms of earnings for each share, which is at an eighteen point four percent increase ever since 2007. For this quarter, the company also decided to take some hits – however, these were pretty much nothing compared to the twenty percent drop over at Intel or even the fifty percent drop over at nVidia.

The global Technology Services Company had posted their revenue and it was down by four percent. Meanwhile, Global Business Services had their revenues down by five percent. Their company also signed around seventeen point two billion dollars in the service business, along with twenty four deals that amounted to figures greater than one hundred million. The Systems and Technology company, which is the hardware segment, had taken the biggest fall of all, as it was down by twenty percent (adjusting for the currency, it was down at sixteen percent) to rest at five point four billion US dollars. It was only System P (which is the power-based servers of RISC that had gone up to eight percent) had risen up. The mainframes of System z were also down by six percent from the previous year, as well as System x x86 had decreased around thirty two percent.

Why the Decrease in Figures?

As later revealed in the succeeding reports, the sales of System x had fallen not because of the economy but because of the phenomenon of virtualization. The senior vice president of the company as well as the chief financial officer of IBM, Mark Loughridge, mentions during the conference call with the financial analysts that it was actually the issue of virtualization which had ended u hitting x86 sales – most especially the blade server which had enjoyed sales once upon a time.