IBM posted strong 4Q 2012 and full year 2012 financials on Tuesday. So strong that the results beat Wall Street’s expectations, as did the technology bellwether’s guidance for the current year. The results bumped up IBM’s stock and helped fuel a market rally for a couple of days at least.
DancingDinosaur particularly liked the performance of the System z. Q4 2012 revenues from System z increased 56% compared with the year-ago period, reflecting the contribution of the zEC12 introduced in 3Q 2012. System z revenue in the growth markets increased 68%. Total delivery of System z computing power, as measured in MIPS, increased 66% versus the prior year and represented the largest MIPS shipment quarter in the company’s history, according to IBM. New workload specialty engines, including the Linux IFL, represented one-half of the MIPS shipped, a further sign that Linux on z is finally gaining real traction after a decade.
Revenues from Power Systems decreased 19% compared with the 2011 period. DancingDinosaur expects that to turn around in 2013 as more Power products using the new Power7+ processor catch on and will get a further boost when machines running the POWER8 processor come out, maybe even in late 2013. DancingDinosaur wrote about Power7+ here back in October.
Let’s let IBM’s top boss, Ginni Rometty, chairman, president and chief executive officer gloat a little: “We achieved record profit, earnings per share and free cash flow in 2012. Our performance in the fourth quarter and for the full year was driven by our strategic growth initiatives—growth markets, analytics, cloud computing, Smarter Planet solutions—which support our continued shift to higher-value businesses. Looking ahead, we continue to invest to deliver innovations for the enterprise in key areas such as big data, mobile solutions, social business and security, while expanding into new markets and reaching new clients. We are well on track toward our long-term roadmap for operating EPS of at least $20 in 2015. If you are an IBM fan, it doesn’t get much better than this.
DancingDinosaur was surprised that the System z was driving the bus this quarter. It expected the front position to be taken by services or software, not hardware and certainly not the z, which sometimes comes across as a multi-billion dollar afterthought.
Software was another high point. According to IBM, software rang up $7.9 billion, an increase of 3% (up 4%, adjusting for currency) from 4Q 2011. Of more interest to DancingDinosaur was IBM’s key middleware products, which are key to driving new workloads on the z.
The middleware products, which include WebSphere, Information Management, Tivoli, Lotus, and Rational rang up $5.5 billion, an increase of 5% (up 6%, adjusting for currency) versus 4Q 2011. Specifically, revenues from the WebSphere family of software products increased 11% year over year. Information Management software revenues increased 2% and revenues from Tivoli software increased 4%. The best performers were Lotus software (including IBM Connections), which increased 9%, and Rational software, up 12%. It is these products, along with Linux on z and Java that enable the kind of new workloads mainframe shops are likely to run.
So, DancingDinosaur has to conclude that this was a pretty good week for IBM and particularly for those invested in the mainframe.