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IBM Lowers Purchase Price as Power Systems Revenue Increases

By Vangie Beal (Send Email)
Posted January 24, 2012


IBM (NYSE: IBM) closed its fourth quarter 2011 with a modest two percent revenue increase from the fourth quarter of 2010. Posting total revenues of $29.5 billion, IBM revenues from the Systems and Technology segment totaled $5.8 billion for the quarter, down 8 percent.

"Revenues from System z mainframe server products decreased 31 percent compared with the year-ago period which was the first full quarter after a new product introduction," said IBM. "Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), decreased 4 percent."

Despite the downturn on the Systems and Technology segment, revenues from Power Systems increased 6 percent compared with the 2010 period. IBM Power Systems provide an enterprise infrastructure via software and servers featuring the Power7 CPU.

With only slight gains on Power Systems, IBM has announced lower purchase prices on select IBM Power Systems features. The price cuts are effective January 17, 2012.

According to IBM's announcement letter, the price cuts range from 20 to 30 percent and only applies to pricing on select 2010 models including Power 710, Power740 and Power 750.

Other hardware revenues reported in IBM's fourth quarter 2011 include a 2 percent decrease on revenues from System x while System Storage decreased 1 percent and revenues from Microelectronics OEM also decreased by 11 percent.

IBM total revenues for the fourth quarter of 2011 of $29.5 billion increased 2 percent (1 percent, adjusting for currency) from the fourth quarter of 2010, broken down as follows, by segment:

  • Global Services revenues increased 7 percent (2 percent, adjusting for currency).
  • The Global Technology Services segment revenues totaled $40.9 billion, an increase of 7 percent (3 percent, adjusting for currency
  • Global Business Services segment revenues were $19.3 billion, up 6 percent (1 percent, adjusting for currency).
  • Software segment revenues in 2011 totaled $24.9 billion, an increase of 11 percent (8 percent, adjusting for currency).
  • Systems and Technology segment revenues were $19.0 billion, an increase of 6 percent (3 percent, adjusting for currency).
  • Global Financing segment revenues totaled $2.1 billion, a decrease of 6 percent (9 percent, adjusting for currency).

"We had a strong fourth-quarter performance, capping a year of record earnings per share, revenue, profit and free cash flow," said Ginni Rometty, IBM president and chief executive officer. "We delivered outstanding results in all four of our strategic initiatives for the quarter and the year, as we continued to realize the benefit of our long-term investments in growth markets, business analytics, Smarter Planet solutions and cloud."

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