It will be interesting to read the fine print in this context, but one thing that is clear is that IBM has mastered the art of catering to Wall Street
IBM said it was able to increase earnings in the face of a revenue slowdown because it is getting a larger share of its business from high-profit software and services. Even in its hardware business, solid sales of high-margin mainframe computers helped offset disappointing sales of commodity-type servers and a 34% sales drop in its semiconductor division.
IBM, which has improved profit margins in its services business in the past year, said outsourcing contracts signed in the quarter grew 20%. Despite restructuring actions, IBM's world-wide employment is now more than 400,000 people, up from 386,000 at the end of last year, Mr. Palmisano said in an internal memo.