IBM (NYSE:IBM) reports 9% gain in second-quarter profits

The technology sector’s health may be threatened as uncertainty about the stability of global market diminished encouraging sign.


The shares of IBM (NYSE:IBM), a multinational computer, technology and IT consulting corporation, slipped nearly 4 percent Monday.


The company unveiled a reduction in the value of service contracts. It reported 9% gain in second-quarter profit with net income up to $ 3.39 billion or $ 2.65 per share in the April-June quarter, $ 7 per share higher compared to analyst projections and higher than a year earlier. However, revenue in the latest period did not meet analysts’ expectation, rising 2 percent to $ 23.7 billion.


IBM Chief Financial Officer Mark Loughridge said that their operations performance was really on the right track to target.


New service-contract signings dipped 12% to $ 12.3 billion. Outsourcing services signings fell 19% in the quarter. Gross profit margin gained slightly to 45.6% in the quarter, compared with 45.5% in the same period one year ago.


The major supplier of business software IMB is also the victim of the turmoil over Europe’s debt crisis as the euro is weakened relative to the dollar. Foreign-currency exchange rates reduced its revenue by roughly $ 500 million in the quarter.


Investors’ concerns about the ability of the government of Greece, Portugal, and Spain to repay high debts along with slow improvement in the U.S economy have dampened Wall Street’s reaction to the results from technology gurus.


Intel Corp. (NASDAQ:INTC) was not hurt by the currency changes as all of its transaction were in dollars. Its shares rose last week, subsequent to its reportedly strong quarter earnings in the company’s four-decade history. Nevertheless, Google (NASDAQ:GOOG) shares posted a tumble, partly due to worries about the weaker euro’s effect on its costs related to employing new workers.


Edward Jones analyst Andy Miedler said that investors expected tech to be a bright spot.


IBM announced some changes to its management ranks.

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