Europe is Achilles? heel in Big Blue?s Q2 results

IBM?s services business drove the company to higher than expected second quarter results, but Europe was once again a chink in the armour.

Second quarter profit for the period ended 30 June was $1.4 billion on a turnover of $18.9 billion, compared with $1.3 billion on a turnover of $18.2 billion for the same quarter last year.

The results were a pleasant surprise for Wall Street, which had predicted earnings per share of $1.42, rather than the $1.46 IBM achieved.

But Europe was a big disappointment, with turnover down by five per cent to $5.7 billion. In contrast, North American turnover rose 10 per cent to $8.6 billion.

Hardware sales were flat, up 0.4 per cent on last year at $8.6 billion, but software revenue fell 3.4 per cent to $3 billion, and revenue from maintenance performed even worse with a fall of seven per cent to $1.6 billion.

The success story of the quarter was the services business, which shot up 23.5 per cent to $4.6 billion.

IBM CEO Lou Gerstner said: ?Our PC commercial and PC server results more than offset declines in other segments, notably our consumer PC business and the AS/ 400 and RS/6000 lines.?