WSJ.com - IBM Earnings Beat Expectations: "By business segment, the strongest performer for IBM in the quarter was its enterprise-systems group, which makes servers and storage systems. The unit reported pretax income rose 32% as sales jumped 9%, led by mainframes and servers powered by Intel Corp. chips. The earnings improvement was fueled by a return to profitability by the semiconductor segment, which was unprofitable a year ago.
The personal-computer business eked out a small profit, as sales rose 17%, led by surging laptop sales. Software sales rose 4.6%, while earnings soared 18%.
IBM's big services group, which accounts for half of overall revenue, reported 10% revenue growth, but pretax income declined slightly. IBM's closely watched backlog of business -- mostly made up of its longtime service-outsourcing contracts -- fell to $110 billion from $118 billion, partly because of the previously announced decision by J.P. Morgan Chase & Co. to cancel a $5 billion outsourcing contract under which IBM was running computer operations for the financial-services company."