Earlier this month, Gartner issued their revised estimates for Q1 worldwide IT spending, and the numbers seem to be improving. The researcher now expects overall global IT spending growth in Q1 of 2012 to have been a mere 2.5% over the year compared with earlier estimates of 3.7%. But the lower figure was on account of the U.S. dollar strengthening over other currencies. Excluding telecom services, Gartner now projects annual average growth of IT spending to be 5.3% in current dollar terms and 5.9% in constant dollar terms from 2011 through 2016. For the current quarter, on a constant currency basis, Gartner now expects worldwide IT spending to grow 5.2% compared with 4.6% projected earlier. Growth during the current quarter is expected to be driven by telecom equipment, which is projected to grow at 10.3% over the year. Computing hardware, which includes PCs, mobile devices, and tablets, will account for 7% growth during the year, and software is projected to grow 7.3% over the year.
Over the past quarter, IT giant IBM’s (Nasdaq:IBM) Q1 revenues grew a marginal 0.3% over the year to $24.7 billion, missing the market’s projected revenues of $24.82 billion. EPS of $2.78 was significantly higher than the Street expectations of $2.66.
By segment, software revenues grew 5% over the year to $5.6 billion, and hardware revenues fell 7% to $3.7 billion. Technology services revenue grew 2% to $10 billion and business services revenue fell 2% over the year to $4.6 billion.
For the current year, IBM raised their guidance to an EPS of $15.00 compared with earlier outlook of $14.85 and market projections of $14.93.
IBM’s Acquisitions in Analytics and Mobile
IBM continues to expand their software offerings as it will help them reach their target of EPS of $20 by 2015. To help with the goal, they continued to acquire other players. They maintained their focus on analytics and earlier this month acquired privately held Toronto-based Varicent Software. Varicent Software automates and analyzes sales data across finance, sales, human resources, and IT departments to uncover trends and drive improved sales performance. IBM will add Varicent’s capabilities to their rapidly growing business analytics segment, which they expect will report revenues of more than $16 billion by 2015.
To cater to mobile device requirements, in January 2012 they acquired Worklight, an Israel- based private provider of software for smartphones and tablets. Through the acquisition, IBM will be able to cater mobile application development, integration, security, and management requirements. Worklight’s offerings help clients develop applications and supporting infrastructures for a variety of mobile platforms while ensuring that they can securely connect to corporate IT systems.
The market has been reacting positively to IBM’s moves within the software sector. Their stock is trading at $199.51 with a market capitalization of $231.16 billion. It touched a 52-week high of $210.69 earlier this month.