There's a lot of green rolling in at Big Blue, as IBM's
The numbers point out just how much the IT (information technology) environment has improved over the past year. Total revenue -- helped by a weak dollar -- was up more than 9%, while earnings from continuing operations jumped 41%, to $1.56 per share. And, looking all the way down to the Foolish bottom line, the world's biggest computer company generated $8.7 billion in free cash flow for all of 2003, 32% more than the previous year.
But perhaps the most important news came during the conference call. Chief Financial officer John Joyce, responding to a question about why the environment has improved so dramatically, in essence said things seem to be brightening across the technology sector. The 18% growth in IBM's hardware division indicates that "customers are now preparing for an uptick in their businesses and they will start again to spend on infrastructure, as well as in our services business." (Transcript provided by CCBN StreetEvents.)
So, if Big Blue has it right, a broad cross-section of companies will be loosening their purse strings when it comes to buying computers, mainframes, software, and services. That bodes well not only for IBM, but for the economy as well. When a firm starts spending again on these items, it's because it expects its own business to improve.
"In the past few years," said Joyce, "we have not been addressing our longer-term growth objectives because the industry was in decline... In 2003, we said the industry has stabilized, and I would characterize 2004 as the year when the IT industry will begin its next growth cycle."