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IBM sees big fall in Global Business Services profits in second quarter

Ginni Rometty

Armonk, NY: IBM painted a mixed financial picture this week, raising its profit outlook for the year, despite falls in most second quarter measures, and a big reverse in profits in its IT consulting business, Global Business Services.

In the three months to June 30, IBM saw net income fall 16.9 percent to $3.2 billion, in part due to a $1bn restructuring charge, most of which relates to its services business outside the US.

Revenue fell 3.3 percent to $24.9bn.

"In the second quarter, we delivered strong performance in our higher-value software and mainframe businesses and again significantly increased our services backlog on growth in new business," said Ginni Rometty, IBM's chief executive.

Services

The firm reported that its Global Technology Services segment revenues decreased 5 percent (down 2 percent, adjusting for currency) to $9.5 billion.

Global Business Services segment revenues were down 1 percent (up 2 percent, adjusting for currency) to $4.6 billion.

Pre-tax income from Global Technology Services decreased 14 percent and pre-tax margin decreased to 15.4 percent. Global Business Services pre-tax income decreased 22 percent and pre-tax margin decreased to 13.0 percent.

The estimated services backlog at June 30 was $141 billion, up 3 percent year over year at actual rates (up 7 percent, adjusting for currency).

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