IBM profits up 7% to USD3.1 billion but revenue falls short

Selling retail store systems business to Toshiba

IBM posted profits of USD3.1 billion for its latest quarter, up 7% year on year, but revenue stayed flat at USD24.7 billionn. Improved margins in its services division helped boost the firm’s profit during the quarter ending March 31, but a decline in hardware sales held down revenues, as IBM continues its greater focus on software. IBM CFO, Mark Loughridge, says that the firm expects hardware revenue growth to resume during Q2, while he tips IBM’s services division to report double-digit profit growth. IBM is placing a greater focus on software, which is typically more profitable than hardware, and the firm was rewarded with 7% year-on-year growth in its software division, although this was countered by a 7% dip in hardware revenues. IBM is raising its forecast as a result of its results, expecting earnings per share of just less than USD15 for full-year 2012.

The results come as IBM confirms that it is selling its retail store systems business to Toshiba in a deal worth USD850 million. The deal sees a new holding company created in which IBM will initially retain a 19.9% stake. The point-of-sale solutions software recorded sales of USD1.15 billion in 2011 and if approved, the deal makes Toshiba the world’s largest POS provider. IBM expects the deal to close at the end of Q2 or beginning of Q3 2012.

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