Booing IBM stuns Wall Street

IBM has stunned Wall Street with much stronger than expected returns for its fourth quarter, with exceptional growth in international markets.

The company reported fourth quarter revenue of US$28.9 billion (A$32.1 billion), a massive 10 per cent increase over the year-ago quarter.

For the full-year, Big Blue revenue grew 8 per cent to US$98.8 billion.

The company will not release a detailed summary of its Q4 numbers until later this week. But chairman and chief executive Sam Palmisano flagged international markets generally, and the fast growing BRIC economies (Brazil, Russia, India and China) specifically as a driver.

“The broad scope of IBM’s global business – led by strong operational performance in Asia, Europe and emerging countries – drove these outstanding results,” Mr Palmisano said.

“IBM is well-positioned as we begin 2008 as a result of our global business reach, solid recurring revenue stream and strong financial position. We are on track to achieve our long-term earnings-per-share roadmap objective in 2010.”

The weak US dollar helped IBM’s results. The company said its revenue growth would have been a still exceptionally strong six per cent had it not been for currency favourable fluctuations.

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IBM wins expanded Telstra deal

IT’S not every day that IBM’s global chief rolls into town. So when Big Blue CEO Sam Palmisano blew into Australia for the first time since taking the helm, it was always a good bet that the local subsidiary would make a big announcement.

No surprise that the announcement should involve Australia’s largest company (and a nine-figure number).

IBM said it has expanded its existing seven-year supply chain deal with Telstra, an extension that would deliver $200 million in additional cost reduction benefits to the telecom giant.

Telstra procurement executive director Ian Wheatley said Phase One of the company’s supply chain project with IBM had been a success and the company was on target to save $500 million over seven years.

The next phase of the supply chain transformation program would focus on improving Telstra’s efficiency in ordering, managing and delivering telecommunication parts needed by technicians and engineers to perform network maintenance, fault repairs and activation of customer services.

“In the first phase of our supply chain transformation, we replaced four payment and ordering systems with IBM's out-of-the-box software,” Mr Wheatly said.

“In phase two of the program, IBM will provide a single end-to-end view of our inventory supply chain and enable us to deliver the right part, at the right place, at the right time – improving customer service and reducing costs. This is great news for our customers and shareholders,” he said.

Telstra says it has reduced its procurement costs by $159 million since September last year.

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