IBM reported earnings for the fourth quarter of 1999 of $2.1 billion, down from $2.3 billion in the same quarter last year.
Revenue for the fourth quarter of 1999 totaled $24.2 billion, down 4 per cent from $25.1 billion recorded in the same quarter a year ago, IBM said in a statement issued today.
First Call First Call analysts polled 24 analysts who predicted average earnings per share for IBM of $1.06.
For 1999 as a whole, IBM reported earnings of $7.7 billion, or $4.12 per diluted share, up from $6.3 billion, or $3.29 per share in 1998.
The year 2000 (Y2K) problem slowed revenue for the quarter, Lou Gerstner, IBM chairman and chief executive officer, said. However, the company posted strong year-long business in its services, software and OEM (original equipment manufacturer) technology sectors, he said.
IBM warned investors in October of last year to expect lower profits for the fourth quarter of 1999 because of the year 2000 problem. The issue will continue to hamper sales into the next quarter, John Joyce, IBM's chief financial officer, said today.
"The Y2K lockdown was very real and impacted most of our largest customers," Joyce said. "We expect to feel continuing effects of Y2K into the first quarter [of 2000]."
One analyst also related IBM's difficulties to the year 2000 problem. "There is usually a six-month lag time in which IT organizations plan and budget orders for most IBM products," said Rob Enderle, an analyst with Giga Information Group. "Most IT organizations planned not to do anything in the six months before or after the New Year."
IBM's fourth quarter revenue in the Americas was $10.4 billion, down 4 per cent from the 1998 period; Europe, Middle East and African revenue was $7.2 billion, down 15 per cent from the same period last year; Asia-Pacific revenue totaled $4.4 billion, up 12 per cent from the same period last year.
OEM revenue for the fourth quarter was $2.2 billion, up 12 per cent from the period one year before; hardware revenue declined 11 percent to $10.2 billion; software revenue totaled $3.6 billion for the quarter, up 2 per cent from the same period last year; and IBM Global Services revenue was $8.7 billion, up 2 percent from the year-ago quarter.