Apple customers waiting to upgrade to a G5 processor will be pleased to hear that IBM will increase microprocessor production this quarter.

IBM senior vice president and chief financial officer Mark Loughridge told Silicon Strategies: IBM plans to boost production by 40 per cent in the fourth quarter."

IBM has struggled with chip yields at its 130- and 90-nm plant. These shortcomings have affected Apple's ability to meet demand for the 64-bit G5 processors in its Power Mac, and now iMac, desktop computers.

During a conference call on Monday, Loughridge indicated that the chip unit is showing some improvement. "300-mm yields continue to improve," he said.

Analysts are positive about the future for the company. SG Cowen Securities analyst Steve Weber said: "Yields and output in the East Fishkill fab are improving, which bodes for a meaningful profit for Microelectronics in Q4 and break-even for year."

Revenue up… slightly

IBM chairman and CEO Samuel Palmisano was bullish about the company's financial third-quarter results. "In what is normally a challenging quarter for the technology industry, IBM delivered one of our strongest third quarters in revenue and earnings growth in recent years. IBM has been gaining momentum throughout the year, and the strength of our integrated business model gives us confidence as we look toward 2005."

IBM revenues for the third quarter were $23.4 billion, up 9 per cent compared with the third quarter of 2003 revenues of $21.5 billion and up 1 per cent sequentially from $23.2 billion in the second quarter of this year.

Third-quarter income was $1.80 billion, an increase of 1 per cent compared with $1.79 billion a year ago. Third-quarter 2004 diluted earnings per common share of $1.06 from continuing operations as reported, compared with diluted earnings of $1.02 per share in the same period of 2003, an increase of 4 per cent.