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IBM's sales fall despite gains in ICs

Posted: 19 Jan 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Mark LaPedus? microelectronics? IBM?

Despite gains within its microelectronics business, IBM Corp. early this week (Jan. 17) posted sales of $24.4 billion in the fourth quarter of 2005, down 12 percent compared to the fourth quarter of 2004.

The computer giant posted a profit of $3.2 billion in the period, compared to $2.8 billion in the like period a year ago. It earned $2.01 per share, including 10 cents for a one-time pretax curtailment charge of $267 million relating to changes to its U.S.-defined benefit pension plans, effective Jan. 1, 2008. This compares to $1.68 in the like period a year ago.

IBM recently said it would stop contributing to its U.S. pension plan starting in 2008, hoping to save billions of dollars by moving all employees over to its 401(k) savings plan.

Overall hardware, outsourcing and software sales were down at IBM. But hardware revenues for IBM's Systems and Technology Group totaled $6.8 billion for the quarter, up 6 percent. Revenues from the zSeries mainframe product increased 5 percent compared with the year-ago period.

Revenues from the pSeries UNIX servers increased 4 percent; however, revenues from the iSeries midrange servers decreased 18 percent and xSeries servers were flat. In addition to the eServers, revenues from storage systems increased 24 percent and microelectronics increased 48 percent in Q4, according to IBM. For 2005, IBM's microelectronics business jumped 16 percent over 2004.

In the microelectronics business, the company attributed the results to the "game chip" business and a 250 percent jump in sales within its 300-mm fab in East Fishkill, N.Y. IBM is making the game-machine processors on a foundry basis for Microsoft, Nintendo, and Sony.

Samuel Palmisano, IBM's chairman and chief executive, was bullish. "IBM finished the year with another strong quarter," he said in a statement. "We had solid performance in systems, middleware and business transformation services, which grew over 25 percent for the year."

Revenues from continuing operations for 2005, which includes PC revenues of $2.9 billion for the first four months of 2005 only, totaled $91.1 billion, down 5 percent from 2004. Diluted earnings per share from continuing operations for 2005 were $4.91 compared with $4.39 per diluted share for the 2004 period.

- Mark LaPedus
EE Times

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