IBM has just released its second quarter 2012 financials with earnings per share (EPS) of $3.51, beating market estimate with revenue of $25.7 billion but off $500 million from what analysts had expected.
IBM expects 2012 EPS of $15.10, up 10 cents compared to what it had originally expected to do.Second-quarter net income was $3.9 billion compared with $3.7 billion in the second quarter of 2011, an increase of 6 percent.
Overall, the earnings results were highlighted by the cash flow for the company that is now at $18 billion. That compares to $16.6 billion in 2011. Ten years ago it was $6 billion. IBM says it is that cash flow that will fuel its future growth through acquisitions and expansion into growth markets.
Software revenues were flat compared to last year. Hardware revenues were down 9% with services off 3%. Revenues for servers, storage and chip sales all declined.
The cloud is a bright spot in the earnings results, doubling in the first-half of 2011. In the earnings call, IBM emphasized its private cloud efforts.
Smarter Planet revenue up more than 20 percent in the first half of the year. The smarter
Business analytics revenues were up 13%. Storage revenues were up 6%. Websphere, through its transactional offerings, was up 7%.
Analysts remarked that services are far down, compared to what the company estimated at the ened of last year. IBM executives said global business services is in a turning phase away from custom solutions. A lot of this is related to software, which has higher margins.