Computer giant’s profit slips

Tuesday, July 25, 2000 | 11:31 a.m.

THE ASSOCIATED PRESS

NEW YORK -- IBM Corp.'s earnings from continuing operations rose 14 percent in the second-quarter, beating analysts' expectations, but the computer services and hardware giant's net income dropped slightly from the year-ago period.

Although personal computer and disk drive sales were disappointing, IBM's chief financial officer, John R. Joyce, touted strong growth in Web server sales and the sale of so-called middleware software used in e-business, especially Web management and database programs.

For the three months ending June 30, International Business Machines earned $1.94 billion, or $1.06 per share, compared with $2.39 billion, or $1.28 per share in the year-ago period, the company said last week.

The year-ago numbers include a one-time gain from the sale of IBM's Global Network's unit and other one-time items. Excluding those items, IBM earned $1.70 billion, or 91 cents per share.

Second-quarter revenues declined by 1 percent from $21.91 billion to $21.65 billion, which analyst George Elling of Lehman Brothers Inc. called "lackluster."

"I think if we look at the quarter from a fundamental perspective, clearly the overall business trend remains weak," Elling said.

Analysts surveyed by First Call/Thomson Financial were expecting IBM to earn $1 per share.

"Essentially, we've had three quarters of slow revenue growth, driven by a combination of the Y2K slowdown," IBM Chairman and Chief Executive Lou Gerstner said in a statement. "During that time, however, we've been able to produce satisfactory earnings growth."