IBM CFO: Economic Environment Has Stabilized
October 15 2009 - 5:37PM
Dow Jones News
The economic environment has "stabilized", the Chief Financial
Officer of International Business Machines Corp. (IBM), Mark
Loughridge, said Thursday, but its giant services business remains
sluggish.
Despite pockets of improving sentiment, most notably in North
America, IBM's new business signings for the services business fell
7% to $11.8 billion in the third quarter.
Loughridge said that while demand in areas like outsourcing, in
which companies pay IBM to handle their core technology functions,
was strong, the short-term consulting and systems integration
business was still challenged.
This reflects a continuation of a trend IBM has seen over
several quarters, whereby customers are buying only the technology
services they need to keep businesses running, or which allow them
to reduce costs, but foregoing more discretionary business
transformation projects.
Revenues at IBM's Global Business Services unit, which includes
consulting and systems integration, fell 11% compared with last
year.
IBM noted, however, that there are considerable regional
variations within this overall figure. In North America, signings
within consulting and systems integration grew 20%, suggesting the
total number is being brought down by weaker performance in other
areas.
Loughridge also noted that IBM signed three large services deals
in the first two days of October - falling outside the third
quarter - with a total value of nearly $1 billion.
-By Jessica Hodgson, Dow Jones Newswires; 415-439-6455;
jessica.hodgson@dowjones.com