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Trading updates from two IT giants have calmed fears that the global economic downturn has engulfed the technology industry. IBM and eBay have each weathered economic woes since last year to yesterday declare 20%-plus profit increases in the first three months of 2008. Their better-than-expected sales coincided with an update from Experian, the data services giant, which said revenues in the six months to March 31 rose by 21%. Despite “continuing marketplace challenges in the US and the UK,” and weakness in its consumer information service, the firm’s data service for British enterprises grew. This didn’t stop it warning that short-term improvements in these markets are unlikely, but it retains a “confident” outlook thanks to its efficiency programme. The tougher economic climate was alluded to by IBM, when it explained its 26% yearly rise in after tax profits was possible after adjusting its business model “as conditions require.” Big Blue’s figures reveal that in the first few months of this year, revenues from its technology, software and business divisions rose 17%, 22% and 17% respectively. The context of these figures is less positive: although economic woes fuelled demand for service projects aimed at cost-cutting, IBM said that tech buyers were being more cautious. “As you would expect in this quarter, customers are scrutinising deals more closely,” Mark Loughbridge, IBM’s chief financial officer was quoted as saying in the Financial Times. “This is not inconsistent with what you’re hearing from others, [but] I think we’re playing this from other parts of the field.” Unlike IBM, Ebay’s shares failed to rise at news of its rise in first quarter profit, enabled by more buyers, more listings and new pricing model. The ongoing expansion of PayPal, Skype and eBay’s classified business also helped sales to rise 24%, and earnings after tax jump 22%, surpassing analysts’ average estimates. The company’s flat shares seem to be explained by a warning from eBay’s chief financial officer Bob Swan. Despite a higher estimate for the full-year ahead, the Guardian reported him noting a “slowing in the propensity of buyers coming to buy” towards the end of the quarter. Last night, Google became the latest technology star to shrug off concerns over the world economy, when it posted a better-than-expected 30% jump in first quarter profits. Apr 18, 2008 Email this article Printer friendly page Previous Page
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