IBM 1Q 2013 Earnings

I was sitting here at JFK waitin’ on a plane and IBM’s 1Q 2013 earnings came across the wire, so here goes:

• Diluted EPS: GAAP: $2.70, up 3 percent; Operating (non-GAAP): $3.00, up 8 percent
• Net income: GAAP: $3.0 billion, down 1 percent; Operating (non-GAAP): $3.4 billion, up 3 percent
• Gross profit margin: GAAP: 45.6 percent, up 0.6 points; Operating (non-GAAP): 46.7 percent, up 1.0 points
• Revenue: $23.4 billion, down 5 percent, down 3 percent adjusting for currency
• Free cash flow of $1.7 billion, down $0.2 billion
• Software revenue flat, up 1 percent adjusting for currency; Pre-tax: income up 4 percent; margin up 1.2 points
• Services revenue down 4 percent, down 1 percent adjusting for currency; Pre-tax: income up 10 percent; margin up 2.0 points
• Services backlog of $141 billion, up 1 percent, up 5 percent adjusting for currency; Closed 22 deals of more than $100 million in the quarter
• Systems and Technology revenue down 17 percent, down 16 percent adjusting for currency
• Growth markets revenue down 1 percent, up 1 percent adjusting for currency
• Business analytics revenue up 7 percent; Smarter Planet revenue up more than 25 percent; Cloud revenue up more than 70 percent
• Reiterating full-year 2013 operating (non-GAAP) EPS expectation of at least $16.70.

IBM announced first-quarter 2013 diluted earnings of $2.70 per share, a year-to-year increase of 3 percent.  Operating (non-GAAP) diluted earnings were $3.00 per share, compared with operating diluted earnings of $2.78 per share in the first quarter of 2012, an increase of 8 percent.

First-quarter net income was $3.0 billion, down 1 percent year-to-year. Operating (non-GAAP) net income was $3.4 billion compared with $3.3 billion in the first quarter of 2012, an increase of 3 percent. Total revenues for the first quarter of 2013 of $23.4 billion were down 5 percent (down 3 percent, adjusting for currency) from the first quarter of 2012. 

“In the first quarter, we grew operating net income, earnings per share and expanded operating margins but we did not achieve all of our goals in the period. Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter.  The services business performed as expected with strong profit growth and significant new business in the quarter,” said Ginni Rometty, IBM chairman, president and chief executive officer.

“Looking ahead, in addition to closing those transactions, we expect to benefit from investments we are making in our growth initiatives and from the actions we are taking to improve under-performing parts of the business.  We remain confident in this model of continuous transformation and in our ability to deliver our full-year 2013 operating earnings per share expectation of at least $16.70.” 

Pre-tax income decreased 6 percent to $3.6 billion.  Pre-tax margin decreased 0.1 points to 15.4 percent.  Operating (non-GAAP) pre-tax income decreased 1 percent to $4.1 billion and pre-tax margin was 17.4 percent, up 0.8 points.

IBM’s tax rate was 15.9 percent, down 4.1 points year over year; operating (non-GAAP) tax rate was 17.3 percent, down 3.2 points compared to the year-ago period. The lower tax rate is primarily due to benefits recorded to reflect changes in tax laws enacted during the quarter, including the reinstatement of the U.S. Research and Development Tax Credit.

Net income margin increased 0.5 points to 13.0 percent.  Total operating (non-GAAP) net income margin increased 1.2 points to 14.4 percent.

The weighted-average number of diluted common shares outstanding in the first-quarter 2013 was 1.12 billion compared with 1.17 billion shares in the same period of 2012.  As of March 31, 2013, there were 1.11 billion basic common shares outstanding.

Debt, including Global Financing, totaled $33.4 billion, compared with $33.3 billion at year-end 2012.  From a management segment view, Global Financing debt totaled $25.2 billion versus $24.5 billion at year-end 2012, resulting in a debt-to-equity ratio of 7.2 to 1.  Non-global financing debt totaled $8.2 billion, a decrease of $0.6 billion since year-end 2012, resulting in a debt-to-capitalization ratio of 34.3 percent from 36.1 percent.

IBM ended the first-quarter 2013 with $12.0 billion of cash on hand and generated free cash flow of $1.7 billion, excluding Global Financing receivables, down approximately $0.2 billion year over year.  The company returned $3.5 billion to shareholders through $0.9 billion in dividends and $2.6 billion of gross share repurchases.  The balance sheet remains strong, and the company is well positioned to support the business over the long term.

Getting S— Done In 2013

Turbo has started off 2013 with a bang…of his Royal typewriter’s manual keystrokes, that is, and all in an effort for increased productivity and eliminating fruitless distractions. Read the accompanying blog post where Turbo shares some of his productivity tips.

For those of you who thought I was just kidding about writing blog posts using my old Royal manual typewriter…Well, surprise. The first draft of this blog post is being written just that way.

Man, I had no idea how much I missed that unique sound of those little keys striking paper.  It’s been YEARS!

I’ll refer you to my previous post to try and understand the method behind my madness…It was part nostalgia, part need to force myself to better focus in 2013, that brought me to this point. And that is the closest I’ll come to having a New Year’s resolution in 2013.

The next logical question, of course, is okay, Turbo, once you have the post down on paper, then what?

That’s a very good question, and I have not figured that part out just yet.

Most likely, I will use Dragon Dictate to voice enter the second and final draft, and, of course, I won’t do this for every blog post I write, only the ones where I really, really want to focus.

But since what was driving this whole thing was the need to eliminate distractions in hopes of getting more “real” work done, I also wanted to come back to the other topic that has been on my mind lately, and that is multitasking.

That’s another good reason to use a manual typewriter. Not only does it not burn any carbon…It CAN’T do more than one thing at a time, which means *I* can’t do more than one thing at a time.

Every year, at the start of the year, I share with my extended team a “getting stuff done” primer. I lean on the basic precepts found in David Allen’s excellent book Getting Things Done: The Art of Stress-Free Productivity, which, for my money, should be required reading for every knowledge worker in the world.

But I like to keep things simple, so I’m going to share with you the Turbo net net version of GSD (I changed the acronym to reflect my enjoyment of wallowing in the perjorative).

1. Like Santa, make a list of all the stuff you need to do — but check it more than twice.

2. In fact, check it EVERY day, especially at the beginning and end of the day.

3. Scratch out the things you get done as you get them done, and write down the things you want to do as you think of them (including when you need to do them by).

4. Always make note of the things you need to do TOMORROW the night before. Do the same on Friday afternoon for the things you want to do on Monday.

If you follow this simple advice, you will rarely walk into the office and NOT know what it is that you ought to be doing that day.

It may seem ridiculously simple, but it’s a lot harder to put into practice than you might think.

And the other part of the story is, once you have all these things out of your head and down on paper or in your computer: Well, you have to do them.

Which means, you have to stop monitoring your incoming email, waiting for that little bell to ring and giving you that ever-fleeting endorphin high.

You have to stop walking down the hall to your colleague’s cubicle so to compare notes on what’s for lunch.

You have to stop playing Solitaire, or << insert name of game on your work computer >> here.

You have to get back to work and actually…well, you know, WORK!

So, once you’ve made the list, and you’ve listed the stuff you need to do generally in order of when you need to get it done, get to it, one item at a time.

Because multitasking is just another convoluted way of procrastinating.

As Mark Twain told us, ““Never put off until tomorrow what you can do the day after tomorrow.”

I found that quote while I was putting off finishing this blog post!