IBM defies meltdown; sees bigger profits ahead
For its second quarter in a row, IBM has beaten the street. All eyes are now on Apple, due to issue its results at 10am NZ time today (see update here).
Athough IBM’s hardware sales slumped 20%, the move reflects a shift in the company’s focus as much as the recession. Booming profits in its hihger-margin software and services divisions, plus a fast-growing business in outsourcing, saw IBM blow past estimates overall.
For the fourth quarter, IBM made $US4.42 billion ( $US3.28 a share), up 12% from $US3.95 billion ($US2.80 a share), a year earlier.
Revenue was down 6.4% to $US27 billion, versus the year-ago $28.87 billion a year before. IBM blamed the strong US dollar for the decline, saying at constant currency rates, revenue would have declined 1%.
IBM chief executive Sam Palmisano says he expects full-year earnings of at least $US9.20 a share, ahead of Wall Street’s $8.75 consensus.
For 2010, Mr Palmisano predicts earnings of $10 to $11 a share, based on the company’s product roadmap, and its success in growth areas like outsourcing.
IBM's results run counter to other tech bellweathers, most recently Intel, which reported a 90% profit decline last week, and saw a tough year ahead.
And as tech companies from Google down cut staff, IBM reported it now has 400,000 employees, up from 386,000 in the fourth quarter last year.
In midday trading, IBM's stock was up 9.55% on the NYSE.