IBM’s Q4 Slips

IBM saw Q4 sales slip 12 percent year-over-year to $24.4 billion, despite a good quarter for its MPU business.

The company was quick to point out, however, that revenues would have been up 3 percent without the impact of the divested PC business and adjusting for currency. With that, the company

"We had solid performance in systems, middleware and business transformation services, which grew over 25 percent for the year,” Samuel J. Palmisano, IBM chairman and CEO, said in a statement. “Our cash position remains very strong, and we saw impressive growth in important parts of our business. We continued to make gains in emerging markets and in important sectors such as healthcare and transportation, and our microprocessors are powering the fast-growing home entertainment market.”

IBM chips play in the leading game consoles, including Micrsoft’s Xbox 360, which landed on shelves in time for last year’s holiday shopping and saw lines wrapped around city blocks as gamers clambered to purchase the next-generation system. IBM designed and co-manufactures the Xbox 360’s custom microprocessor, which is a triple-core PowerPC that runs at a frequency of 3.2GHz. At a cost of $106, this single part accounts for 20.2 percent of the total bill-of-materials cost for the Xbox 360 Premium http://www.reed-electronics.com/electronicnews/article/CA6286803, according to research from iSuppli. 

Income from continuing operations in Q4 was $3.2 billion, including a one-time charge for pension changes. This compares with $2.8 billion in Q4 2004. Without the one-time charge, income from continuing operations of $3.4 billion in the quarter increased $541 million, or 19 percent, versus the comparable period last year, the company said.

Full-year revenue was a decrease of 5 percent, with IBM pointing out that it would have been up 3 percent, adjusting for currency and the divested PC business. Income from continuing operations for the year was $8 billion compared with $7.5 billion for the same period of 2004.

Looking ahead, IBM believes it will see a solid year for its continuing operations. "IBM is ready for 2006, as we continue to deliver on our agenda of driving innovation and transformation for our clients and their businesses,” Palmisano concluded.