IBM last night posted better-than-expected quarterly earnings on strength in its services and software businesses to trigger a 4 per cent rise in its shares.
Investors seemed reassured that IBM had recovered its footing after a bombshell profit shortfall in the first quarter, which had triggered an 8 per cent decline in its share price the next day.
IBM was the year-to-date worst-performing component of the Dow Jones index at the close of trade yesterday. Second-quarter income - excluding the effects of a job cut plan, the sale of its PC business and a legal settlement with Microsoft, rose nearly 5 per cent - and most businesses beat investor expectations.
Chief financial officer Mark Loughridge told analysts after the report that Wall Street expectations for the second half "remain reasonable".
Without charges or gains, net income rose to $1.82 billion, or $1.12 per diluted share, compared with the year-earlier quarter's $1.74 billion, or $1.01 per share, which was restated to include the effect of expensing stock options.
IBM revenue grew 6 per cent, excluding the PC business, which it sold to China's Lenovo Group in May.
IBM's Global Services business, which is roughly half of the company's total revenue, showed solid growth in revenue and a surge in signings of new contracts. Services revenue rose 6 per cent to $12 billion.
Shares of IBM jumped 4.4 per cent to $85.40 after the report from their close at $81.81 on the New York Stock Exchange.