IBM's 4Q Profit Drops, But Still Tops ExpectationsIBM's 4Q Profit Drops, But Still Tops Expectations

In an indication that technology spending remains flat at best, IBM said Thursday that its total sales fell 3% last year and that profits were off sharply in the fourth quarter. IBM reported total revenue of $81.2 billion for 2002, compared with $83.1 billion in 2001. Meanwhile, net income for the year, excluding results from discontinued operations, fell 34.5%, to $5.3 billion.

For the fourth quarter ended Dec. 31, IBM said income from continuing operations declined 25.5%, to $1.9 billion. Per-share earnings, excluding charges, were $1.34--4 cents ahead of Wall Street's expectations. Fourth-quarter revenue increased 7%, to $23.7 billion.

The bright spot on IBM's balance sheet was its services division, which reported a 16.7% increase in fourth-quarter sales. IBM also said it signed $18 billion in new services contracts during the period. The numbers were helped by the acquisition last year of PricewaterhouseCoopers Consulting. IBM's Global Services group posted a 4% gain in revenue on the year.

Hardware sales improved by 1.3% during the fourth quarter but were off by more than 10% for the year as IBM exited the storage disk-drive business. Software sales were virtually flat during the quarter and increased just 1% for 2002.