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January 19, 2011, 12:10 AM EST
By Katie Hoffmann
Jan. 19 (Bloomberg) -- International Business Machines Corp. rose 3 percent in late trading yesterday after reporting fourth-quarter profit and sales that topped analysts’ estimates.
Per-share profit rose to $4.18, the Armonk, New York-based company said yesterday in a statement, beating the $4.08 average estimate of analysts’ surveyed by Bloomberg. Sales climbed to $29 billion as hardware revenue got a boost from IBM’s newest mainframe and companies bought more analytics software.
Services signings jumped 18 percent to $22.1 billion, the first increase in a year. Full-year profit this year, excluding some costs, will be at least $13 a share, the company said.
IBM climbed as much as $4.59 to $155.24 in extended trading, after rising 65 cents to a record closing price of $150.65 in New York Stock Exchange composite trading. The stock gained 12 percent last year.
“Investors are encouraged by strengths in the signings this quarter,” said Deutsche Bank analyst Chris Whitmore, who rates the shares “buy” and doesn’t own them. “They exited the year well. There’s not a lot to pick on this quarter.”
The company is the second technology bellwether whose earnings suggest an uptick in information-technology spending. Last week, Intel Corp., the world’s biggest chipmaker, forecast first-quarter sales that may top estimates, as companies buy more computers and servers.
Fourth-Quarter Sales
Fourth-quarter hardware revenue climbed 21 percent to $6.3 billion, as the mainframe introduced in July helped boost sales in that product category by almost 70 percent. Sales from the software division gained 7 percent to $7 billion.
Net income for the quarter increased 9.2 percent to $5.26 billion from $4.81 billion, or $3.59 a share, a year earlier. Analysts estimated sales of $28.3 billion on average.
Revenue from growth markets, such as Brazil, India and China, climbed 15 percent. Sales from the regions will make up at least a quarter of revenue by 2015, the company said in May, up from 21 percent last year.
Starting with the 2011 full-year forecast, IBM is moving to an operating reporting format, which excludes acquisition and some retirement costs. Per-share earnings on that basis will be at least $20 in 2015, the company said, reiterating its forecast from May. Revenue will increase by about $20 billion in that period, the company said.
Reporting operating earnings provides more transparency and a better comparison to other technology companies, Chief Financial Officer Mark Loughridge said on a conference call yesterday.
Software and Deals
Chief Executive Officer Sam Palmisano is investing in analytics software and cloud computing, which the company forecasts will become $16 billion and $3 billion businesses respectively by 2015. Smarter Planet, Palmisano’s initiative to digitally monitor anything from roads to hospitals to make them more efficient, should grow to a $10 billion business.
Palmisano also plans to spend about $20 billion on acquisitions through 2015. He announced 15 deals last year, including storage-computer maker Netezza Corp. for $1.7 billion.
--Editors: Peter Elstrom, Stephen West
To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.
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Jan. 19 (Bloomberg) -- International Business Machines Corp. rose 3 percent in late trading yesterday after reporting fourth-quarter profit and sales that topped analysts’ estimates.
Per-share profit rose to $4.18, the Armonk, New York-based company said yesterday in a statement, beating the $4.08 average estimate of analysts’ surveyed by Bloomberg. Sales climbed to $29 billion as hardware revenue got a boost from IBM’s newest mainframe and companies bought more analytics software.
Services signings jumped 18 percent to $22.1 billion, the first increase in a year. Full-year profit this year, excluding some costs, will be at least $13 a share, the company said.
IBM climbed as much as $4.59 to $155.24 in extended trading, after rising 65 cents to a record closing price of $150.65 in New York Stock Exchange composite trading. The stock gained 12 percent last year.
“Investors are encouraged by strengths in the signings this quarter,” said Deutsche Bank analyst Chris Whitmore, who rates the shares “buy” and doesn’t own them. “They exited the year well. There’s not a lot to pick on this quarter.”
The company is the second technology bellwether whose earnings suggest an uptick in information-technology spending. Last week, Intel Corp., the world’s biggest chipmaker, forecast first-quarter sales that may top estimates, as companies buy more computers and servers.
Fourth-Quarter Sales
Fourth-quarter hardware revenue climbed 21 percent to $6.3 billion, as the mainframe introduced in July helped boost sales in that product category by almost 70 percent. Sales from the software division gained 7 percent to $7 billion.
Net income for the quarter increased 9.2 percent to $5.26 billion from $4.81 billion, or $3.59 a share, a year earlier. Analysts estimated sales of $28.3 billion on average.
Revenue from growth markets, such as Brazil, India and China, climbed 15 percent. Sales from the regions will make up at least a quarter of revenue by 2015, the company said in May, up from 21 percent last year.
Starting with the 2011 full-year forecast, IBM is moving to an operating reporting format, which excludes acquisition and some retirement costs. Per-share earnings on that basis will be at least $20 in 2015, the company said, reiterating its forecast from May. Revenue will increase by about $20 billion in that period, the company said.
Reporting operating earnings provides more transparency and a better comparison to other technology companies, Chief Financial Officer Mark Loughridge said on a conference call yesterday.
Software and Deals
Chief Executive Officer Sam Palmisano is investing in analytics software and cloud computing, which the company forecasts will become $16 billion and $3 billion businesses respectively by 2015. Smarter Planet, Palmisano’s initiative to digitally monitor anything from roads to hospitals to make them more efficient, should grow to a $10 billion business.
Palmisano also plans to spend about $20 billion on acquisitions through 2015. He announced 15 deals last year, including storage-computer maker Netezza Corp. for $1.7 billion.
--Editors: Peter Elstrom, Stephen West
To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.
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