Wall Street Beat: Tech bellwethers report mixed quarter

Software sales show resiliency as PC market flags, but other segments of tech look weak

By , IDG News Service |  Hardware

Meanwhile, in keeping with general expectations for the tech sector, IBM's software product range did better than other aspects of its business. IBM Thursday reported a 5 percent year-over-year decline in revenue to $23.4 billion and a 1 percent decline in net income to $3 billion.

Revenue from the software business was flat at $5.6 billion, and up 1 percent adjusting for currency. Other businesses did not fare as well. Global Technology Services revenue decreased 4 percent, down 2 percent adjusting for currency, while revenue from the Systems and Technology unit totaled $3.1 billion, down 17 percent, or 16 percent adjusting for currency.

The weakness in systems makes sense given U.S. government spending cuts that are part of the so-called "sequestration," Forrester's Bartels noted. "One of the easiest things for government agencies to cut back on is hardware," Bartels said. Services did not do as well as expected, perhaps a result of weakness in spending on software in the third quarter last year, and its subsequent effect on projects that required consulting services, Bartels noted.

Things were worse for chip makers Intel and Advanced Micro Devices, both dependent on the PC market. Intel on Tuesday reported that quarterly net income dropped year over year by 25 percent, to $2.05 billion, while revenue declined 2.5 percent to $12.6 billion. Intel is trying to get into the fast-growing tablet market, dominated by ARM chips, and expects to ship new smartphone and tablet chips to device makers this quarter.

AMD is also moving into new markets, having recently signed a deal with ARM to build low-power server processors around the U.K. company's architecture. Meanwhile, on Thursday it reported that quarterly revenue plunged year over year by 31 percent to $1.09 billion. It had a net loss of $146 million, improving on its loss of $590 million a year earlier by reining in costs.

Google results Thursday showed that the decline in average ad prices is easing up, suggesting that companies are paying more for ads that reach mobile devices. The cost of paid clicks fell by approximately 4 percent compared to last year, but the decline is better than the 6 percent drop Google reported during its last earnings report in January. Google's total first-quarter revenue rose by 31 percent to about $14 billion, while net earnings increased 16 percent to $3.35 billion.

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