IBM yesterday announced third-quarter 2005 diluted earnings per common share of U.S. $0.94 from continuing operations, including $0.32 per share for a one-time charge of $525 million for taxes in connection with the planned repatriation of foreign earnings. Diluted earnings per share for the third-quarter 2005 were $1.26, excluding this one-time charge. Diluted earnings in the third quarter of 2004 were $0.92 per share, including $0.11 per share for a one-time, pre-tax charge of $320 million for a partial settlement of legal claims against IBM's pension plan. Excluding these non-recurring items, diluted earnings per share of $1.26 in the third-quarter 2005 increased $0.23, or 22 percent over the diluted earnings per share of $1.03 in the year-ago quarter.
International Business Machines Corporation, based in Armonk, New York, U.S., said third-quarter income from continuing operations was $1.5 billion, including the one-time charge for taxes associated with the planned repatriation of foreign earnings under the provision of the American Jobs Creation Act of 2004. This compares with $1.6 billion in the third quarter of 2004, which includes the one-time, pre-tax charge for the legal settlement related to the pension plan. Without the one-time charges, income from continuing operations of $2.0 billion in the third quarter of 2005 increased $292 million, or 17 percent versus the comparable period last year.
Total revenues for the third quarter of 2005 of $21.5 billion decreased 8 percent from the third quarter of 2004, which includes revenue from the divested PC business. Excluding the PC revenue, revenues increased 4 percent compared with the third quarter of 2004.
"IBM had a good quarter. It showed the strength of our business model across hardware, software and services, and we continued to see the benefit of the strategic transitions that we've implemented in past quarters," said Samuel J. Palmisano, IBM chairman and CEO. "Our restructuring actions and our streamlined management in Europe are starting to yield results. We saw excellent earnings-per-share improvement this quarter, and many of the businesses that are central to our strategy - including middleware, midrange servers, and Business Performance Transformation Services, especially in our Engineering and Technology Services - performed well, especially in emerging markets around the world. We are encouraged by the client reaction to the new zSeries mainframe, and IBM is well positioned in our microelectronics business as the game console industry moves to its next generation of products. Our clients are leveraging IBM's unique ability to apply innovative, high-value skills and solutions to transform their businesses and industries."
Third-quarter revenue growth was 4 percent excluding the divested PC business. In the Americas, third-quarter revenues were $9.6 billion, down 5 percent as reported (up 5 percent, adjusting for currency and PCs) from the 2004 period. Revenues from Europe/Middle East/Africa were $6.9 billion, down 6 percent (up 5 percent, adjusting for currency and PCs). Asia-Pacific revenues decreased 17 percent (2 percent, adjusting for currency and PCs) to $4.3 billion. OEM revenues were $814 million, up 12 percent compared with the 2004 third quarter.
Without the PC business, revenues increased in three of IBM's five key industry sales units in the third-quarter 2005 led by good growth in the public and distribution sectors, as well as in sales to small and medium businesses. IBM's revenues for Business Performance Transformation Services grew over 35 percent in the quarter (and are up over 30 percent year to date).
IBM's Year-To-Date 2005
Income from continuing operations for the 9 months ended September 30, 2005 was $4.8 billion compared with $4.7 billion for the same period of 2004, including non-recurring items.
Diluted earnings per share from continuing operations for nine months of 2005 were $2.92 compared with $2.72 per diluted share for the 2004 period. Excluding the non-recurring items from both periods, diluted earnings per share were $3.22 compared with diluted earnings per share of $2.83 for the 2004 period, an increase of 14 percent. Revenues from continuing operations for the 9-month period, which includes PC revenues of $2.9 billion for the first 4 months of 2005 only, totaled $66.7 billion, down 3 percent (5 percent, adjusting for currency) compared with $68.6 billion for the 9 months of 2004. Without the revenues from the divested PC business, revenues totaled $63.8 billion, up 5 percent (3 percent, adjusting for currency) compared with the 9-month period of 2004.
For total operations, net income for the first 9 months of 2005, including a loss from discontinued operations of $27 million, was $4.75 billion, or $2.90 per diluted share, compared with the 9 months of 2004 net income of $4.65 billion, or $2.72 per diluted share, which included a loss from discontinued operations of $3 million.
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