Volume 3, Number 40 -- October 24, 2006

Some Insight Into IBM's Server Sales for Q3

Published: October 24, 2006

by Timothy Prickett Morgan

Kudos once again to Richard Farmer, the lead IT analyst at brokerage house Merrill Lynch, for peeling apart IBM's financial results for the third quarter of 2006. As usual, Farmer has estimated what each of the four IBM server lines brought to the top line in the quarter.

The System i5 line brought in, according to Farmer's estimates, about $301 million in sales in the quarter, down 22 percent compared to the $388 million in sales from the third quarter of 2005. While this number was pretty low, it was not as bad as in the first quarter, when IBM sold only $236 million in i5 iron. The second quarter of 2006 was, in the wake of new product announcements, a little better; in Q2, IBM pushed $319 million in i5 gear, which was 10 percent lower than the $342 million in sales Merrill Lynch believes IBM had in the same quarter of 2005.

For the third quarter, Farmer and his team were expecting IBM to book around $353 million in i5 sales, which would have still been a decline, but a much smaller one. (How refreshing to see analysts coming clean on their estimates before the numbers become public and showing how far off they were.) Merrill Lynch undershot its guess for mainframe sales by 26 percent compared to where they actually came in, at $956 million, during the quarter. And System p5 Unix server sales beat its estimates by 5 percent, too, hitting $930 million in the quarter. System x server sales were about where Merrill expected, with $1.08 billion in sales. Yes, IBM now makes almost as much money from selling X86 and X64 servers as it does selling mainframe or Power servers.

Looking ahead, anyone would be a bit hesitant to speculate a big upturn in i5 sales. Farmer's projections for the fourth quarter peg i5 sales at $444 million, down 2 percent, with mainframe sales down 20 percent to $1.12 billion. (IBM had a killer fourth quarter last year for mainframes, thanks to the System z9 EC machines shipping in volume.) Merrill Lynch is also expecting System p5 sales to hit $1.43 billion, up 15 percent, and System x sales to hit $1.3 billion, up 11 percent.


Merrill Lynch Estimates IBM iSeries and System i Sales for Q1

A Little More Insight into IBM's Server Sales in Q4 and 2005

Sponsored By

The Linux Infrastructure & Storage Company

ShaoLin Microsystems is the leading provider of Linux infrastructure and storage software solutions for enterprise.

· ShaoLin HA Cluster - Easy-to-use and low cost high availability cluster software to minimize system downtime.

· ShaoLin Volume Replicator - Powerful and open disaster recovery solution to ensure data integrity and application availability.

· ShaoLin CogoFS - Outperform compressed filesystem for Linux to multiply network performance and storage capacity.

Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Kevin Vandever,
Shannon O'Donnell, Victor Rozek, Hesh Wiener, Alex Woodie
Publisher and Advertising Director: Jenny Thomas
Advertising Sales Representative: Kim Reed
Contact the Editors: To contact anyone on the IT Jungle Team
Go to our contacts page and send us a message.

Sponsored Links

Linux Networx:  Clusterworx streamlines and simplifies cluster management
COMMON:  Join us at the Spring 2007 conference, April 29 - May 3, in Anaheim, California
Scalix:  Advanced email and calendaring for power users in the enterprise


Subscription Information:
You can unsubscribe, change your email address, or sign up for any of IT Jungle's free e-newsletters through our Web site at

Copyright © 1996-2008 Guild Companies, Inc. All Rights Reserved.
Guild Companies, Inc., 50 Park Terrace East, Suite 8F, New York, NY 10034

Privacy Statement