Wall Street got a chance to catch its breath a little yesterday after the market closed when IBM announced its financial results for the fourth quarter, a quarter that was impacted by the economic crisis last summer and fall but one in which Big Blue nonetheless was able to pull out of the fire profit-wise by cutting costs. More importantly, perhaps, IBM’s top brass reaffirmed that they were on track, despite the state of the global economy, to meet aggressive profit targets.
In the fourth quarter, which bore the brunt of the economic meltdown and which saw 1.53 million layoffs of full-time workers in the United States, IBM did see a decline in sales. But aggressive cost cutting and margin management allowed the company to actually beat the estimates Wall Street was making about IBM’s possible profits in the quarter. (As if we trust even a tenth of what Wall Street says these days.) IBM’s sales worldwide actually declined by 6.4 percent to just a hair over $27 billion, but despite that decline, IBM held gross margins and actually boosted net income by 12 percent to $4.43 billion. And because IBM buys back buckets of its own shares each quarter “to return value to its shareholders,” er, to financially engineer its earnings per share growth, IBM was still able to show a 17.1 percent increase in EPS to $3.28 in the quarter. While not a miracle, this is nonetheless a fine piece of piloting in some pretty rough waters. No question about that.