10-QPeriod: Q2 FY2011

INTERNATIONAL BUSINESS MACHINES CORP Quarterly Report for Q2 Ended Jun 30, 2011

Filed July 26, 2011For Securities:IBM

Summary

International Business Machines Corporation (IBM) reported strong financial results for the quarter and six months ended June 30, 2011. Total revenue increased by 12.4% year-over-year for the quarter and 10.1% for the six-month period, demonstrating robust demand across its key segments. Net income saw an 8.2% increase for the quarter and a 9.0% increase for the six months, driven by revenue growth and improved gross margins, particularly in Systems and Technology and Software. The company's growth initiatives, including performance in emerging markets (BRIC countries) and strategic areas like business analytics, cloud computing, and Smarter Planet, are contributing significantly to revenue expansion. IBM continues to return value to shareholders through substantial common stock repurchases and dividends, totaling nearly $5 billion in the quarter and nearly $10 billion year-to-date. Management has raised its full-year earnings per share expectations, reflecting confidence in continued strong performance.

Financial Highlights

50 data points
Beta

Revenue

$26.67B

46.4% Gross Margin

Net Income

$3.66B

13.7% Net Margin

EPS (Diluted)

$3.00

Total Assets

$113.47B

Cash & Equivalents

$11.71B

Free Cash Flow

$3.22B

Financial Statements
Beta
Revenue$26.67B
Cost of Revenue$14.28B
Gross Profit$12.38B
R&D Expenses$1.57B
SG&A Expenses$6.03B
Interest Expense$97.00M
Net Income$3.66B
EPS (Basic)$3.04
EPS (Diluted)$3.00
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Revenue growth of 12.4% in Q2 2011 and 10.1% for the first six months, with significant contributions from Systems & Technology and Software segments.
  • 2Net income increased by 8.2% for the quarter and 9.0% for the six-month period, indicating strong profitability.
  • 3Diluted earnings per share (EPS) rose 14.9% to $3.00 for the quarter and 16.0% to $5.30 for the six-month period.
  • 4Growth markets, particularly the BRIC countries, showed exceptional performance, with revenue increasing 22.6% (13% adjusted for currency) for the quarter.
  • 5Company returned significant capital to shareholders through stock repurchases ($8.0 billion year-to-date) and dividends ($1.7 billion year-to-date).
  • 6Management raised full-year 2011 earnings per share guidance, signaling confidence in sustained performance.

Frequently Asked Questions

IBM's total revenue increased by 12.4% year-over-year to $26.7 billion for the quarter ended June 30, 2011. Excluding currency impacts, revenue grew 5.1%.

The Systems and Technology segment saw revenue growth of 17.5% (12% adjusted for currency), driven by strong performance in System z, Power Systems, and System x. The Software segment also performed well, with revenue increasing 16.9% (10% adjusted for currency), led by key branded middleware.

IBM returned nearly $5 billion to shareholders in the second quarter through common stock repurchases and dividends. Year-to-date, the company has repurchased approximately $8.0 billion of its common stock and paid $1.7 billion in dividends.

IBM has raised its full-year earnings per share expectations. The company now expects GAAP earnings per diluted share of at least $12.87 and operating (non-GAAP) earnings per diluted share of at least $13.25, reflecting confidence in continued strong performance.