IBM Wraps Up 2010 With Sales Just Short Of $100 Billion

IBM is almost -- but not quite -- a $100 billion company.

Fueled by a surge in sales of mainframe computers and middleware software in the fourth quarter, IBM said Tuesday that revenue for all of 2010 reached $99.87 billion, just $130 million shy of $100 billion.

For the fourth quarter ended Dec. 31, IBM reported revenue of $29.02 billion, up 6.6 percent from $27.23 billion in revenue in the fiscal 2009 fourth quarter. Earnings increased 9.2 percent to $5.26 billion from $4.81 billion in the same period one year earlier.

’We just delivered a great quarter to wrap up a great year,’ said CFO Mark Loughridge in a conference call with financial analysts. He trumpeted the fact that the company’s $11.52 earnings per share ($14.83 billion in net income) for 2010 exceeded an EPS goal of $11 set in 2005. The year also marked IBM’s eighth consecutive year of recording double-digit EPS growth, the CFO said.

Loughridge also touted a number of financial milestones IBM has achieved in the last 10 years, including expanding sales in ’growth markets’ such as China and India by $10 billion and returning $107 billion to shareholders. The year 2010 ’marked the end of a very successful decade,’ the CFO said.

While IBM has placed increased emphasis on software and services in recent years, sales from the company’s Systems and Technology operation, largely servers and storage hardware, spiked 21 percent in the fourth quarter to $6.28 billion. Much of that gain came from System z mainframe sales, up 69 percent in the quarter, following the debut in July of the company’s next-generation zEnterprise line of mainframes. System x server sales increased 18 percent in the quarter while Power System sales grew 2 percent. Revenue from storage system products increased 8 percent.

For all of 2010 Systems and Technology generated $17.97 billion in sales, up 11 percent from $16.19 billion in 2009.

Next: Solid Growth For Software And Services

IBM’s software products generated sales of $7.04 billion in the fourth quarter, up 7 percent from the same period in 2009. That gain was fueled by increased sales of WebSphere middleware (up 32 percent year over year), Tivoli systems management software (up 12 percent), Information Management products (up 10 percent) and Rational development tools (also up 10 percent).

Sales of Lotus applications, however, dropped 3 percent compared to the fourth quarter of 2009.

For all of 2010 software products generated $22.49 billion in sales, up 5.1 percent from $21.4 billion in 2009.

Revenue from Global Technology Services increased 1.1 percent in the quarter to $10.17 billion from $10.05 billion in the same quarter one year earlier, while revenue from Global Business Services grew 3.9 percent to $4.76 billion from $4.58 billion one year ago.

For all of 2010 Global Technology Services recorded sales of $38.2 billion, up 2.3 percent from $37.35 billion in 2009. Global Business Services recorded sales of $18.22 billion in 2010, up 3.2 percent from $17.65 billion in 2009.

IBM is setting a goal of achieving operating earnings per share of $20 in 2015, Loughridge said.