On The Call: IBM CFO Mark Loughridge on whether business spending on technology is recovering

On The Call: IBM CFO on business spending

SAN FRANCISCO — IBM Corp.’s latest quarterly results pull in two directions at once. Sales were down 7 percent as corporate technology spending remained weak, but net income was up 14 percent, mostly the result of IBM’s ability to wring more profit from its services and software divisions.

A question hanging over the Armonk, N.Y.-based company has been when it believes business spending on technology might recover. Rival consulting firm Accenture has hesitated to predict a full recovery in business spending. And Intel Corp., the world’s No. 1 computer microprocessor maker, warned this week corporate spending would likely remain weak until 2010.

In a conference call with analysts following IBM’s third-quarter report, IBM’s chief financial officer, Mark Loughridge, is asked about spending trends the company is seeing.

QUESTION: Do you really believe corporate technology spending is improving at all?

ANSWER (Mark Loughridge, IBM chief financial officer): “I think the results that we are seeing are more indicative of the strength of IBM’s offerings and our ability to drive value in our offerings to our client base. So I wouldn’t make a comment on technology spending. What we see more broadly, I think, is some stabilization in the economic environment. And one of the key indicators I think of that stabilization, which I think you would agree with, is credit markets have certainly improved on a year-to-year basis. You remember last time at this point in time, we were talking about, questions like, “Well, do you have commercial paper?” or “Do you have a financing business?” We are certainly through those kinds of questions. With that improvement in credit markets, I believe the environment has stabilized. But I do think we had some very good offerings driving performance in the third quarter.”