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Scott Jagow: During bad times in the 1990’s, IBM laid off a staggering number of people — 150,000. And going into this recession, there was a lot of fear that IBM would have to do it again, because the workforce had grown so much since the 90’s. But it doesn’t look at all like a massive downsizing will happen. IBM reported its latest profit numbers last night. And they were darn good. As one analyst put it: IBM did really, really, really well. Here’s Ashley Milne-Tyte.
Ashley Milne-Tyte: IBM is taking Wall Street by surprise. The company forecast significantly higher profits for 2009. The technology bellweather seems confident it can ride out the financial crisis with its new focus.
These days, the majority of IBM’s earnings come from selling software, as well as services such as Internet security. Those contracts have higher profit margins than hardware.
Tom Smith is an equity analyst with Standard & Poors. He says there are other reasons IBM is out-earning its rivals:
Tom Smith: Its global reach and its full suite of product offerings that gives customers the chance to do one-stop shopping so that they don’t have to deal with multiple vendors.
IBM’s main customers are big corporations and governments. Smith says IBM may have a long list of outstanding orders, which is also helping it stay bullish on this year’s outlook. He says the tech company isn’t announcing widespread layoffs for now, but may be cutting costs by not renewing contracts of temporary workers.
I’m Ashley Milne-Tyte for Marketplace.
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