In a fourth quarter that included expensive charges primarily related to its acquisition of PricewaterhouseCoopers Consulting (PwCC), IBM has posted growing revenue but declining income.
Chairman and Chief Executive Officer Sam Palmisano characterised this result as strong in "one of the most challenging years in business".
Including $US405 million in charges, IBM reported fourth-quarter income from continuing operations of $US1.9 billion, down from $2.6 billion in 2001's fourth quarter. Excluding the charges, IBM's continuing-operations income would have been $US2.3 billion.
Revenue from continuing operations for the quarter, which ended December 31, was $US23.7 billion, up 7 per cent from $US22.1 billion in the same quarter in 2001.
The consensus estimate of analysts polled by Thomson Financial/First Call had been for $US1.30 in per-share earnings. IBM's actual per-share earnings from continuing operations were $US1.11; however, excluding the PwCC charges, per-share earnings would have been $US1.34.
PwCC's affect on IBM's bottom line was immediately clear this quarter: After several quarters of slight declines, IBM's Global Services unit (into which PwCC was integrated) generated 17 per cent year-over-year revenue growth, to $US10.6 billion. New contract signings also surged sequentially, from $US9 billion in the third quarter of 2002 to $US18 billion in the fourth.
That total includes a seven-year, $US5 billion outsourcing agreement with JP Morgan Chase & Co, under which IBM will absorb several thousand JP Morgan employees and assume responsibility for a wide array of the financial services firm's IT needs.
IBM also reported its full-year 2002 results, showing a significant decline in income from continuing operations. IBM's reported income plunged from $US8.1 billion in 2001 to $US5.3 billion in 2002. However, that drop included $US1.5 billion in charges for PwCC's integration and restructuring in IBM's microelectronics division.
Revenue for the full year was down 2 per cent at $US81.2 billion compared with $US83.1 billion in 2001.