Software gives IBM 13 per cent profit hike

Big Blue software pushes profits while mainframe revenue falls

Technology giant IBM has attributed an increase in its profits during the first quarter of 2010 to software sales – largely of middleware packages.

The giant's profits were up 13 per cent to $2.6bn (£1.7bn) in Q1 compared with 2009's $2.3bn.

Big Blue added that although revenue was up five per cent at $22.9bn from 2009, currency fluctuations meant its revenue was effectively flat.

IBM president and chief executive Samuel J Palmisano said: "we had strong results in strategic investment areas including growth markets, business analytics and Smarter Planet solutions.”

He also said he was confident that the company would continue to grow revenue.

"Given our mix of higher-value business and productivity, we will expand margins, grow profit, cash and EPS, and increase returns to shareholders," he said.

Revenue from the EMEA region totalled $7.6bn; down two per cent adjusting for currency year on year.

Software revenue was another driving force behind IBM's profits, with an 11 per cent (five per cent currency adjusted) increase of $5bn.

IBM's middleware packages WebSphere, Information Management, Tivoli, Lotus and Rational were responsible for revenue of $2.8bn, while operating systems brought in $499m.

Its hardware revenue increased five per cent (two per cent currency adjusted) from Q1 2009, with its System X blade (x86) and rack server revenue growing 36 per cent, while revenue from both its Power (IBM manufactured 64-bit systems) and System Z mainframe hardware fell 17 per cent.