IBM 4Q 2012 Earnings Rise On Software Sales

IBM announced this afternoon fourth-quarter 2012 diluted earnings of $5.13 per share, compared with diluted earnings of $4.62 per share in the fourth quarter of 2011, an increase of 11 percent.

Fourth-quarter net income was $5.8 billion compared with $5.5 billion in the fourth quarter of 2011, an increase of 6 percent. Total revenues for the fourth quarter of 2012 of $29.3 billion decreased 1 percent (flat adjusting for currency) from the fourth quarter of 2011.

“We achieved record profit, earnings per share and free cash flow in 2012. Our performance in the fourth quarter and for the full year was driven by our strategic growth initiatives — growth markets, analytics, cloud computing, Smarter Planet solutions — which support our continued shift to higher-value businesses,” said Ginni Rometty, IBM chairman, president and chief executive officer.

“Looking ahead, we continue to invest to deliver innovations for the enterprise in key areas such as big data, mobile solutions, social business and security, while expanding into new markets and reaching new clients. We are well on track toward our long-term roadmap for operating EPS of at least $20 in 2015.”

Following are key details of 4Q 2012 earnings:

Fourth-Quarter 2012

Diluted EPS:

GAAP: $5.13, up 11 percent;

Operating (non-GAAP): $5.39, up 14 percent;

Net income:

GAAP: $5.8 billion, up 6 percent;

Operating (non-GAAP): $6.1 billion, up 10 percent;

Gross profit margin:

GAAP: 51.8 percent, up 1.8 points;

Operating (non-GAAP): 52.3 percent, up 2.1 points;

Revenue of $29.3 billion, down 1 percent, flat adjusting for currency:

Up 1 percent excluding divested RSS business adjusting for currency;

Free cash flow of $9.5 billion, up $0.6 billion;

Software revenue up 3 percent, up 4 percent adjusting for currency;

Services revenue down 2 percent, down 1 percent adjusting for currency;

Services backlog of $140 billion, flat, up $1 billion adjusting for currency;

Systems and Technology revenue down 1 percent, up 4 percent excluding RSS:

System z mainframe up 56 percent.

Full Year 2012

Diluted EPS, up double-digits for 10th consecutive year:

GAAP: $14.37, up 10 percent;

Operating (non-GAAP): $15.25, up 13 percent;

Net income:

GAAP: $16.6 billion, up 5 percent;

Operating (non-GAAP): $17.6 billion, up 8 percent;

Revenue of $104.5 billion, down 2 percent, flat adjusting for currency;

Free cash flow of $18.2 billion, up $1.6 billion;

Growth markets revenue up 4 percent, up 7 percent adjusting for currency:

BRIC countries up 7 percent, up 12 percent adjusting for currency;

Business analytics revenue up 13 percent;

Smarter Planet revenue up more than 25 percent;

Cloud revenue up 80 percent.

Full-Year 2013 Expectation:

GAAP EPS of at least $15.53 and operating (non-GAAP) EPS of at least $16.70.

Not Back In Davos

It’s that time of the year.

The year when all the smart, rich, famous and well-connected show up in Davos, Switzerland for the World Economic Forum.

I’m sure it’s nothing personal, but once again for as many years as I care to remember, my invitation never showed.

That’s okay, as things are pretty busy around here as we get off to a fast start in 2013.

However, I did really enjoy Alison Smale’s big picture set up piece for Davos this in The New York Time’s DealBook.

And if I were in attendance, that’s the type view I would be eagerly seeking — What are the general macroindicators and movements that smart peeps think are going to shape the year?

Some will be currents we can’t yet see, and as Smale observes, “Our footing is uncertain, as on this ski resort’s slithery streets, and we have steep slopes to climb, as the Magic Mountain will remind the global elite this week.”

Troubles in north Africa, the challenge of free information in China, anemic growth in Germany, the averted fiscal cliff but once again looming U.S. debt ceiling…”Crisis, in short,” writes Smale, “is the new normal.”

Speaking of Germany, also increasingly normal is the threat of cyber intrusion, according to a panel at the DLD conference ending today in Munich.

In coverage by Frederic Larinois from TechCrunch of Eugene Kaspersky, founder of Kaspersky Lab, the Internet security firm, and F-Secure’s chief research officer, Mikko Hypponen, it became readily apparent that cyber intrusion sophistication is reaching new levels.

Kaspersky spoke of recent cyber attacks like Stuxnet and Red October, suggesting such efforts have reached the equivalent of the “space station” in terms of their sophistication and impact, while Hypponen said the “happy hacker” of the 80s and 90s was long, and that instead “we now have to deal with criminals who try to make money from their malware and botnets, hacktivists who try to protest and governments attacking their own citizens and other governments for espionage and full-scale cyber warfare.”

The cyber genie, in other words, is well out of the virtual bottle.

So, let’s forget about all these woes for a few, shall we, and go shopping instead?

IBM’s new study of 26,000 global consumers will be coming out soon, and the early skinny has it revealing some interesting insights, including the fact that 35 percent of shoppers are unsure whether they would next shop at a store or online.

Talk about a confused consumer!

It also revealed that nearly half of online purchases result from “showrooming,” a growing trend whereby consumers browse goods at a store, but ultimately buy them online.

You’ve done that before, haven’t you?  You just didn’t know there was a fancy name for it!

Ultimately, consumers are seeking an integrated shopping experience.  So, in response, retailers need to connect their online and physical stores, blending the benefits of each — from research to purchase to building brand loyalty, to that ultimate golden chalice of retail, repeat sales.

IBM is helping through its analytics capabilities, helping retailers measure sales metrics across digital channels to spot consumer buying patterns and visualizing product display, promotions, and even coupons in new ways.

Visit the IBM Smarter Retail web site to learn how your organization can create an integrated shopping experience.

Me, I’ve got to run down to the Amazon store for some new typewriter ribbons. 😉