IBM earnings better analysts' estimates

NEW YORK - IBM, the world's largest computer-services provider, posted fourth-quarter profit and sales that topped analysts' estimates as firms spent more on computer systems and software.

Per-share profit rose to US$4.18, the Armonk, New York-based company said yesterday in a statement, topping the US$4.08 average estimate of analysts surveyed by Bloomberg.

Sales climbed 6.6 per cent to US$29 billion ($37.4 billion) as hardware revenue got a boost from IBM's newest mainframe and companies bought more analytics software. Analysts estimated sales of US$28.3 billion on average.

Services signings rose 18 per cent to US$22.1 billion, the first increase in a year. Full-year profit this year, excluding some costs, will be at least US$13 a share, the company said.

"IBM's well positioned as the economies around the world are starting to pick up and IT spending starts to pick up," said Collins Stewart analyst Lou Miscioscia, who rates the shares "buy" and does not own them.

The company is the second technology bellwether whose earnings suggest an uptick in information-technology spending. Last week Intel, the world's biggest chipmaker, forecast first-quarter sales that may top estimates, as companies buy more computers and servers.

IBM climbed as much as 2.9 per cent to US$155.05 in late trading. The shares have gained 2.7 per cent this year.

Fourth-quarter hardware revenue climbed 21 per cent to US$6.3 billion, as the mainframe introduced in July helped boost sales in that product category by almost 70 per cent.

Sales from the software division gained 7 per cent to US$7 billion.

Net income for the quarter increased 9.2 per cent to US$5.26 billion from US$4.81 billion, or US$3.59 a share, a year earlier.

Starting with the 2011 full-year forecast, IBM is moving to an operating reporting format, which excludes acquisition and retirement costs.

Per-share earnings on that basis will be at least US$20 in 2015, the company said yesterday, up from its May prediction of US$20 per share.

Revenue will increase by about US$20 billion in that timeframe, the company said.

Chief executive Sam Palmisano is investing in analytics software that predicts trends, which will be a US$16 billion business for IBM by 2015, and cloud computing, expected to generate US$3 billion annually by then.

Smarter Planet, Palmisano's initiative to digitally monitor anything from roads, buildings and hospitals to make them more efficient, should grow to a US$10 billion business.

- BLOOMBERG