IBM today announced its financial results for the third quarter of 2006. Diluted earnings per share are now $1.45, a 54% jump from the same time last year. Income from continuing operations for the third quarter was $2.2 billion, another jump from the $1.5 billion over the same period in 2005. Total debt for IBM currently stands at $22 billion. That’s down from where the company ended last year, at $22.6 billion.
Total revenue reached $22.6 billion, a 5% increase from last year. Software sales accounted for a large chunk of that - $4.4 billion (9% up from 2005). Several areas of IBM’s software market saw double-digit growth from last year. The company’s WebSphere brand saw 30% more revenue this quarter than in Q3 2005. Information management sales also rose substantially, up 12% from last year.
Tivoli software saw increased sales of 44% more than the same period in 2005, which Mark Loughridge, senior vice present and CFO of IBM, says is in part because of the continuing growth provided from the acquisition of network management software company Micromuse in February.
The only software area that substantially decreased from last year was operating systems (OS). Sales totalled $552 million, a decrease of 6% from 2005. Loughridge said this is due in large part to price cuts in OS software. Overall, software sales were the single largest profit contributor for the quarter, according to Loughridge.
Hardware sales, which took in $5.5 billion, were less profitable than software and were headlined by demand for service-oriented architecture (SOA) and information on demand platforms. Revenue from System z, System p, system storage, and microelectronics had the best outcome, with increases of 25%, 10%, 12%, and 29% over last year, respectively.
IBM’s did not provide details on its stake in video game hardware. Loughridge made just a quick comment that gaming processors were important to the company. IBM is producing processors for both the PS3 and the Wii, which make their retail debuts next month (17 November for the PS3 and 19 November for the Wii) and are expected to sell out immediately. Combined with additional hardware expected to be released before the end of the year, millions of units of hardware will be sold in the next quarter.
IBM also makes the Xbox 360 processors, and although sales of Microsoft’s platform have scaled down since it was released last year, there could be a holiday boom, especially if the price gets cut upon the launch of its competitors, as has been rumored several times over the past months.