"I hear it's tight most every night,
But now I might be mistaken.
Hmm, hmm, hmm, hmm."
-- "La Grange," by ZZ Top, from the 1973 album Tres Hombres
The weaker dollar has been very, very good to IBM
Last night, Big Blue reported earnings of $1.65 per share on $24.5 billion of revenue. That's 36% higher earnings per share than last year's comparable period, and 11% stronger revenue. But if you take out the effects of changing currency exchange rates, sales increased by a mere 4%. CEO Sam Palmisano must be praying for more American interest rate cuts and inflation.
The press release contains several sentences of commentary on the results from Palmisano, in which he mentions variations on "global strength" three times. I'm counting "We feel good about the rest of the year" against the sentence quota here. In other words, it's clear that management feels very strongly about the company's opportunities abroad.
Digging deeper on that theme, the Americas made up the slowest-growing geographical segment as reported at an 8% clip, year over year, but it was the fastest at 6% when adjusting for exchange effects. How can the Americas get currency adjustments? It's simple: IBM is pretty big in Latin America and Canada.
In case you want a reference point against the competition, IBM's middleware segment reported 19% growth. That compares to 17% growth at TIBCO
IBM's power seems to lie in its market positioning, with just about the right business mix across geographies and products for this moment in time. Let's see how long it can last.