IBM Corp. today reported a 20% increase in third-quarter net income, which grew to $2 billion, or $1.08 per share, compared with $1.8 billion, or 93 cents a share, for the same period last year.
However, supply shortages in its microelectronics business as well as lackluster software and server sales hampered revenue, which grew 3% to $21.8 billion.
"Demand for our microelectronics products -- from both outside customers and internal IBM customers -- far outstripped our ability to supply components," said Louis V. Gerstner, Jr., IBM's chairman and chief executive. But despite supply shortages, the company reported that its microelectronics business grew "strongly."
Meanwhile, hardware revenues were $9.5 billion in the third quarter, representing an increase of 4% compared with last year's third quarter. PC and Web server revenues also increased, although the company's sales of AS/400 systems, declined due to supply shortages and product transition issues. Pricing pressures also served to reduce IBM's System/390 revenue.