IBM Reports 2006 Third-Quarter Results

IBM Reports 2006 Third-Quarter Results

IBM today announced third-quarter 2006 diluted earnings of $1.45 per share from continuing operations, an increase of 54 percent as reported, compared with diluted earnings of $.94 per share in the third quarter of 2005; the third-quarter 2005 diluted earnings include $.32 per share for a one-time charge of $525 million for taxes in connection with the 2005 repatriation of foreign earnings. Diluted earnings per share for the third-quarter 2006 grew 15 percent compared with the year-ago quarter of $1.26 per diluted share, without the one-time per share charge.

Third-quarter income from continuing operations was $2.2 billion compared with $1.5 billion in the third quarter of 2005, including the one- time charge, an increase of 47 percent. Income from continuing operations for the third quarter grew 9 percent compared with the third-quarter 2005 income from continued operations of $2.0 billion, excluding the one-time charge. Total revenues for the third quarter of 2006 of $22.6 billion increased 5 percent (4 percent, adjusting for currency) from the third quarter of 2005.

Samuel J. Palmisano, IBM chairman, president and chief executive officer, said: “Our strong performance is the result of excellent execution and the repositioning of IBM’s business model to capture the growth and profit areas of a rapidly changing IT industry.”

From a geographic perspective, the Americas third-quarter revenues were $9.8 billion, an increase of 3 percent as reported (2 percent, adjusting for currency) from the 2005 period. Revenues from Europe/Middle East/Africa were $7.3 billion, up 6 percent (2 percent, adjusting for currency). Asia-Pacific revenues increased 4 percent (6 percent, adjusting for currency) to $4.5 billion. OEM revenues were $1.0 billion, up 24 percent compared with the 2005 third quarter.

Revenues from Software were $4.4 billion, an increase of 9 percent (7 percent, adjusting for currency) compared with the third quarter of 2005. Revenues from IBM’s middleware brands, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $3.4 billion, up 12 percent versus the third quarter of 2005. Operating systems revenues decreased 6 percent to $552 million compared with the prior-year quarter. Revenues from other software and services increased, which includes the Product Lifecycle Management portfolio of products.

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