IBM services buoy third-quarter earnings

Services and software help Big Blue profit grow 6 percent, offsetting a decline in its mainframe hardware sales.

IBM on Tuesday reported a 6 percent profit increase in the third quarter of this year, riding a strong performance from its services division that compensated for a decline in its hardware business.

The company earned $2.36 billion, or $1.68 per share, which narrowly beat out analysts' profit estimates.

The computing giant said the revenue growth in its services division was the highest since 2003. Services contracts in the quarter totaled $11.8 billion, up 12 percent year over year.

Revenue from its Systems and Technology group was $4.9 billion, down 10 percent. Excluding the impact of the sale of its printing division, revenue was down 6 percent.

In a statement, IBM CEO Samuel Palmisano said that IBM was working through a "transition" in its hardware business. Sales of its mainframe servers dropped 31 percent compared with the same period last year.

In its high-margin software business, IBM's revenue was up 7 percent, aided by acquisitions.

 

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