IBM Consulting Grew Profit 15% on Nearly Flat Sales. Can That Continue?

International Business Machines Corporation (NYSE:IBM) produced a useful surprise inside its consulting business: second-quarter segment profit rose 15.1%, although revenue increased just 0.2%. Improving delivery economics can lift earnings, but repeated margin expansion becomes harder when sales barely move.

The July 22 results and quarterly filing showed $647 million of consulting segment profit on $5.327 billion of revenue. A year earlier, profit was $562 million. IBM attributed the improvement primarily to productivity actions, partly offset by investment in innovation.

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For illustration purposes only: work on a laptop.

Each margin point has a measurable payoff