More on IBM’s earnings announcement:
I.B.M.’s solid profit performance came largely from higher profit margins in the services and software businesses that now account for more than 80 percent of the company’s earnings.
In a difficult economic environment, I.B.M. has apparently been successful in convincing corporations and government agencies that its technology would deliver gains in efficiency. “Cost-saving offerings continue to sell,” Mark Loughridge, I.B.M.’s chief financial officer, said during a conference call with analysts.
I.B.M. has held up better than many of its peers in the technology sector because of its global reach and its mix of businesses. About 40 percent of its revenue and 60 percent of its profit come from products and services sold on a subscription basis as licenses or contracts that are renewed every year or so.
Such annuity businesses include services that support essential client operations like billing. Most companies do not regard these as discretionary purchases.