Product does the business for IBM in Q2

Big Blue posts impressive hardware sales but exchange rate roulette squashes services growth

Strong product sales helped IBM post respectable second-quarter numbers as services growth slowed to a canter.

Big Blue's Q2 2011 worldwide revenue was up 12 per cent annually to $26.7bn (£16.6bn), while GAAP net income rose eight per cent to $3.7bn. But top-line growth was more than halved by fluctuating exchange rates, with constant currency growth for Q2 pegged at just five per cent.

Hardware was IBM's star performer in Q2, with revenue up 12 per cent in constant currencies to $4.7bn. Pre-tax profit more than doubled on the corresponding period last year to $393m.

The vendor's software operations also enjoyed a robust quarter, with revenue of $6.2bn. Currency-adjusted annual sales growth stood at 10 per cent, while pre-tax income rose 12 per cent to $2.3bn.

Growth in Big Blue's services division was more muted, with total revenue up just two per cent in constant currencies to $15.1bn. Pre-tax profit rose four per cent year on year to $2.2bn.

Adjusting for currency, IBM's financing revenue fell 11 per cent to $519m, although pre-tax profit grew seven per cent to $496m.

The Americas was Big Blue's best-performing region, with sales of $11.2bn, equating to constant currency growth of eight per cent. EMEA and Asia-Pacific both posted currency-adjusted revenue expansion of three per cent, with total sales of $8.6bn and $6.2bn respectively.

Sam Palmisano (pictured), chief executive of IBM, said: "In the second quarter our long-term strategic investments in the company's growth initiatives again helped drive strong revenue performance. Hardware, software and services revenue grew at double digits, and we achieved strong profit and free cash flow growth.

"As IBM begins its second century, we continue a process of transformation, positioning the company to lead in the future and deliver higher value to our clients and our shareholders."