IBM, the world's largest computer services company, last night reported a higher-than-expected quarterly profit and strong growth in its software business after it cut jobs, sending its shares higher.
IBM said software revenue rose 5 per cent and revenue from its Microelectronics unit - boosted by its microprocessors for gaming consoles - was up 45 per cent, though new services contracts were down sharply and services revenue was off slightly from the year-earlier quarter.
IBM also said its 2006 earnings per share would be consistent with Wall Street forecasts. Second-quarter net income climbed 11 per cent to $2.02 billion, or $1.30 per share, from $1.83 billion, or $1.12 per share, a year earlier. Revenue fell 1.7 per cent to $21.9 billion from $22.3 billion, which included $557 million from the PC business that IBM sold to Lenovo Group Ltd.
Analysts, on average, had forecast earnings before exceptional Excluding the divested PC business, revenue rose 1 per cent, IBM said.
IBM's shares rose 1.6 per cent to $75.42 in late trading on the Inet electronic brokerage network from a close at $74.26 on the New York Stock Exchange.
The shares have fallen about 11 per cent this year, compared with the 1 per cent decline of the Standard & Poor's 500 index. The stock trades at just under 13 times estimated 2006 earnings per share, less than the 16 per cent multiple of the Merrill Lynch Tech 100 index.