IBM reported a 22 per cent rise in quarterly profit, beating Wall Street targets and raising its 2008 forecast, as emerging markets used its services, software and equipment to expand, and larger countries turned to technology to save money.
IBM posted a 12 per cent rise in service contract signings, a business in which it leads the world, and said major Western countries were buying technology to reduce costs, as well as manage risks and compliance.
The results were much sunnier than those posted by Google and Microsoft, which both missed analysts' targets, with the software maker citing a tough US economy and Google blaming lower returns managing its cash.
IBM Chief Financial Officer Mark Loughridge told a conference call that US revenue grew 5 per cent in the quarter, the weak dollar helped IBM and that currency hedges would help it mitigate any strengthening of the dollar next year.
It was difficult not to say IBM was ahead on reaching its 2010 profit target, he concluded. The company is widely seen as a defensive play for investors in a troubled market.
"Once again pretty impressive," said Zach Rosenstock, an analyst at Wayne Hummer Wealth Management. "They're focusing outside the US to ride through the domestic downturn."
International Business Machines Corp said second-quarter net income rose to $2.77 billion, or $1.98 per share, from $2.26 billion, or $1.55 per share, a year earlier.
Revenue rose 13 per cent to $26.8 billion. Currency gains added 7 percentage points to the growth rate, IBM said.
Analysts, on average, expected profit of $1.82 per share and revenue of $25.92 billion, according to Reuters Estimates. But shares sagged slightly in after-hours trading.
Reuters