IBM beats the Street, gives rosy forecast

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- IBM posted a fourth-quarter profit Tuesday that beat Wall Street expectations. The tech giant also pointed to an improved outlook for 2010.

The Armonk, N.Y.-based company reported a profit of $4.81 billion, or $3.59 per share, which was 9% higher than what IBM reported last year.

Analysts polled by Thompson Reuters expected $3.47 per share.

Sales rose a modest 1% to $27.2 billion, slightly ahead of forecasts.

Sales in the company's services sector and software sector each increased 2%, while revenue in its hardware business fell 4%.

IBM expects to improve its revenue performance in 2010.

"There were a number of large deals that did not close during the fourth quarter and have contributed to a very strong first quarter opening pipeline," said Mark Loughride, IBM senior vice president and chief financial officer, during a conference call. "And consequently, we expect software to grow revenue double digits in the first quarter."

He added that the company's software business has almost tripled since 2000.

IBM said it expects earnings per share of at least $11 for the full year. In its last forecast, the company said it was "well ahead" of pace to earn between $10 and $11 per share in 2010.

"We are confident about 2010 and our ability to achieve the high end of our long-term roadmap," IBM chairman, president and chief executive Samuel Palmisano said in a prepared statement.

While cost-cutting measures boosted 2009 earnings, Loughride said 2010's numbers will be lifted by higher revenue.

Investors were unimpressed. Shares of IBM (IBM, Fortune 500) fell 2% in after-hours trading, after climbing 1.8% in the regular session.

"IBM had very solid results. But investors were hoping for an even better guidance," said Peter Misek, analyst at Canaccord Adams.

He added that IBM's estimate of $11 in earnings per share is "very conservative," and that the company is likely to see the figure closer to $11.50 or beyond if the economy continues to gain strength.

For the full year, IBM reported a profit of $13.4 billion, or $10.01 per share, on revenue of $95.8 billion. That compared with earnings of $12.3 billion, or $8.89 per share, on revenue of $103.6 billion in 2008. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,215.61 24.24 0.14%
Nasdaq 4,623.74 -14.25 -0.31%
S&P 500 1,997.41 -4.75 -0.24%
Treasuries 1.76 0.04 2.09%
Data as of 11:31am ET
Company Price Change % Change
Yahoo! Inc 43.25 -3.21 -6.91%
Facebook Inc 76.73 0.49 0.64%
Bank of America Corp... 15.24 0.04 0.30%
Apple Inc 116.92 1.61 1.40%
Microsoft Corp 41.14 -0.05 -0.12%
Data as of 11:18am ET

Sections

There was a big drop off in Americans filing for unemployment last week, but that might be an anomaly. More

On demand delivery startup WunWun is expecting its order volume to double by the time they close up shop on Monday. All thanks to a blizzard. More

401(k) balances reached a record high last year, thanks to a soaring stock market and larger contributions from workers participating in the savings plans, according to Fidelity. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.