10-QPeriod: Q1 FY2011

INTERNATIONAL BUSINESS MACHINES CORP Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 26, 2011For Securities:IBM

Summary

International Business Machines Corporation (IBM) reported solid first-quarter 2011 results, demonstrating revenue growth, margin expansion, and double-digit earnings per share increase. Total revenue grew 7.7% year-over-year (5.0% adjusted for currency), driven by strong performance in Systems and Technology, Software, and Global Services. Net income rose 10.1% to $2.86 billion, resulting in diluted earnings per share of $2.31, a 17.3% increase from the prior year. The company also generated significant operating cash flow, enabling substantial shareholder returns through share repurchases and dividends. IBM reiterated its positive outlook for the full year 2011, increasing its earnings per share expectations.

Financial Highlights

48 data points
Beta

Revenue

$24.61B

44.1% Gross Margin

Net Income

$2.86B

11.6% Net Margin

EPS (Diluted)

$2.31

Total Assets

$112.96B

Cash & Equivalents

$12.76B

Free Cash Flow

$2.79B

Financial Statements
Beta
Revenue$24.61B
Cost of Revenue$13.75B
Gross Profit$10.86B
R&D Expenses$1.59B
SG&A Expenses$5.83B
Interest Expense$93.00M
Net Income$2.86B
EPS (Basic)$2.34
EPS (Diluted)$2.31
Shares Outstanding (Basic)1.22B
Shares Outstanding (Diluted)1.24B

Key Highlights

  • 1Total revenue increased by 7.7% to $24.61 billion, or 5.0% adjusted for currency.
  • 2Net income grew by 10.1% to $2.86 billion.
  • 3Diluted earnings per share (EPS) rose by 17.3% to $2.31, with operating (non-GAAP) diluted EPS up 20.5% to $2.41.
  • 4Global Services revenue increased 6.2% (3% adjusted for currency), with total outsourcing revenue up 6.8% (4% adjusted for currency).
  • 5Systems and Technology revenue saw a significant increase of 18.7% (16% adjusted for currency), led by strong performance in System z and Power Systems.
  • 6Software revenue grew 5.8% (4% adjusted for currency), and excluding divested operations, improved by 9.6% (8% adjusted for currency).
  • 7The company returned approximately $5 billion to shareholders through share repurchases ($4.05 billion) and dividends ($0.79 billion) in the quarter.

Frequently Asked Questions

IBM's total revenue for the first quarter of 2011 was $24.61 billion, an increase of 7.7% compared to $22.86 billion in the same period of 2010. Excluding the impact of currency fluctuations, revenue grew by 5.0%.

IBM's consolidated gross profit margin improved to 44.1% from 43.6% in the prior year's quarter. The net income margin was 11.6%, up from 11.4% in the first quarter of 2010. The company also highlighted strong operating (non-GAAP) margins.

All major segments showed growth. Global Services revenue increased 6.2% (3% adjusted for currency). Systems and Technology saw a substantial 18.7% jump (16% adjusted for currency), driven by mainframes and Power Systems. Software revenue increased 5.8% (4% adjusted for currency), with strong performance in branded middleware and business analytics.

IBM returned approximately $5 billion to shareholders. This included $4.05 billion in common stock repurchases and $0.79 billion in cash dividends. The company also announced an increase in its quarterly dividend and an additional $8 billion authorization for stock repurchases shortly after the quarter ended.

IBM increased its full-year 2011 earnings per share expectations. The company now anticipates GAAP earnings per diluted share of at least $12.73 and operating (non-GAAP) earnings per diluted share of at least $13.15.