IBM earnings up 10 percent, helped by weak dollar

Apr 19, 2011 By PETER SVENSSON , AP Technology Writer
A scientist uses IBM's Blue Gene Supercomputer at the IBM Alamden Research Center in San Jose, Calif., Monday, April 18, 2011. The Supercomputer is used for research on gene sequencing and cognitive analytics. IBM Corp. reports quarterly financial earnings Tuesday, April 19, 2011, after the market close.(AP Photo/Paul Sakuma)

(AP) -- IBM Corp. on Tuesday reported stronger-than-expected net income and revenue for the first quarter, helped by the weak dollar and strong performance from its hardware division.

The computer and consulting-services company also raised its full-year forecast for operating earnings by 1 percent. However, the stock retreated, possibly in reaction to a decline in new contract signings in the outsourcing business.

Net income rose 10 percent to $2.86 billion, or $2.31 per share. In the year-ago period, IBM earned $2.6 billion, or $1.97 per share.

Excluding mostly acquisition-related charges, earnings were $2.41 per share, beating the average analyst estimate as polled by FactSet of $2.29.

Revenue rose 8 percent to $24.6 billion. The increase would have been 5 percent at constant currency rates. Analysts expected $24.02 billion, or about a 3 percent increase at constant currencies, IBM said.

IBM said it expects full-year operating earnings of "at least" $13.15 per share, up from an earlier forecast of $13. Its goal for 2015 is to boost that to $20 per share, and it says it's well on its way to getting there.

In extended trading, after the release of the results, IBM shares were down $3.41, or 2 percent, at $161.99. The shares are close still to their all-time high of $167.72, hit March 9.

Analyst Toni Sacconaghi at Sanford Bernstein noted on a conference call that service contract signings were down 18 percent compared to last year, surprising him.

IBM Chief Financial Officer Mark Loughridge said it was natural for the signings to be down after a strong fourth quarter, and the signings are, in any case, a volatile measure that doesn't directly predict service revenue.

Bob Djurdjevic, an analyst with Annex Research, agreed, calling the overall results "significantly better than expected."

Investors had been fearing that the economic disruption in Japan after the earthquake could have affected IBM, Djurdjevic said, and should be relieved that the impact was minimal. That demonstrates that IBM, because of its globe-spanning reach, isn't dependent on any one market or product, he said. IBM's revenue from China rose 33 percent, and Russia was even stronger, at 53 percent.

"When one part fails, another part more than makes up for it," Djurdjevic said.

The U.S. and Asia, excluding Japan, were the strongest markets, with Europe and Japan lagging.

Hardware sales did particularly well, rising 16 percent at constant-currency rates from last year. The new System Z mainframe, which extends a four-decade old line, was the best performer, with sales up 38 percent.

Hardware accounts for 16 percent of IBM's revenue but little of its pretax profits. Its consulting and outsourcing businesses, which account for more than half of revenue were more sluggish, with revenue rising just 3 percent in constant-currency rates. However, they expanded their profit margins.

Explore further: Why the Sony hack isn't big news in Japan

not rated yet
add to favorites email to friend print save as pdf

Related Stories

IBM expects earnings of $20 per share in 2015

May 12, 2010

(AP) -- IBM Corp. said Wednesday it expects to earn at least $20 per share in 2015, excluding some acquisition and pension-related costs - a forecast that reflects the growing importance of IBM's hugely profitable software ...

IBM's earnings indicate tech spending picking up

Apr 19, 2010

(AP) -- IBM Corp. said Monday its first-quarter profit jumped 13 percent, and the company offered evidence that corporate technology spending is rebounding after the recession.

Business buying lifts Intel as tablet threat looms

Apr 19, 2011

(AP) -- Intel Corp. has sent a strong message to Wall Street: Tablets may be transforming the computer industry, but there's still a lot of money left to be made in the huge market for traditional PCs.

IBM's net tops Street; outsourcing deals pick up

Jan 18, 2011

(AP) -- IBM Corp.'s better-than-expected fourth quarter profit shows the momentum from a new mainframe computer and a pickup in businesses' interest in outsourcing their information technology chores.

Oracle fiscal 3Q net income up 78 pct

Mar 24, 2011

(AP) -- Database software maker Oracle Corp. said Thursday its net income rose 78 percent in the fiscal third quarter, helped by a rise in new software license sales and the benefit of three full months of ...

IBM's profit rises 9 pct, revenue growth resumes

Jan 19, 2010

(AP) -- IBM Corp. said Tuesday that it managed a 9 percent increase in profit in the last quarter as the technology company's revenue grew for the first time in a year and a half.

Recommended for you

Why the Sony hack isn't big news in Japan

5 hours ago

Japan's biggest newspaper, Yomiuri Shimbun, featured a story about Sony Corp. on its website Friday. It wasn't about hacking. It was about the company's struggling tablet business.

Sony faces 4th ex-employee lawsuit over hack

10 hours ago

A former director of technology for Sony Pictures Entertainment has sued the company over the data breach that resulted in the online posting of his private financial and personal information.

Sony tells AFP it still plans movie release

11 hours ago

Sony Pictures boss Michael Lynton denied Friday the Hollywood studio has "caved" by canceling the release of "The Interview," and said it still hoped to release the controversial film.

2012 movie massacre hung over 'Interview' decision

Dec 19, 2014

When a group claiming credit for the hacking of Sony Pictures Entertainment threated violence against theaters showing "The Interview" earlier this week, the fate of the movie's big-screen life was all but ...

Clooney slams skittish Hollywood after Sony hack

Dec 19, 2014

Film star George Clooney slammed the Hollywood movie industry for failing to stand up against the cyber threats that prompted Sony Pictures to cancel release of the movie "The Interview."

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.