Console Chips Provide Growth Area For IBM

Officials from IBM have released earnings for the company’s fourth quarter 2005, with results exceeding estimates. In fact, the company’s microelectronics division, which includes IBM's work on the next generation of video games consoles from Microsoft, Sony and Nintendo saw the largest revenue boost. For the last three months of 2005, IBM saw net profits rise to $3.19 billion, on revenue of $24.4 billion. In the same period in 2004, the company saw net profits of just $2.83 billion, $1.67 per share, with revenue of $27.7 billion. If results from the company’s recently sold personal computer division are ignored, though, revenue would have been much closer at $24.7 billion. The fourth quarter marked the first full period in which IBM's newest mainframe was available for sale, with revenue in the mainframe line rising by 5 percent. This was dwarfed, however, by a 48 percent rise in revenue from the company’s microelectronics division, which makes chips for video game consoles and other high-end applications - chip manufacturing revenue for the Xbox 360 would have likely been included in this figure. The company has worked with Sony and Toshiba to co-produce the Cell technology being used in the PlayStation 3, and has provided the PowerPC-based CPU multi-core processor architecture for Microsoft's Xbox 360. In addition, IBM has also worked with Nintendo to create the CPU, codenamed Broadway, for the forthcoming Revolution console, meaning that the firm will have a share in revenue for all three next-gen consoles. For the whole year, IBM earned $7.93 billion, $4.87 per share, on revenue of $91.1 billion. This compares to profits of $7.48 billion, $4.38 per share, on revenue of $96.3 billion in 2004.