Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

IBM earnings jump 13%

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- IBM reported strong earnings Monday and boosted its outlook for the rest of the year, citing a double-digit increase in software sales.

The Armonk, N.Y.-based tech giant said its profit for the first quarter rose to $2.6 billion, up 13% from last year.

The company earned $1.97 per share, beating expectations and jumping 16% from the same quarter last year. Analysts polled by Thomson Reuters were looking for earnings of $1.93 per share.

Sales rose in the first quarter by 5% to $22.9 billion, beating analysts' forecast of $22.75 billion. Revenue was boosted by growth in the company's software sector, which increased 11%.

"We had a very good start to the year," Mark Loughridge, IBM chief financial officer, said in an earnings call. "Our best growth came from software, which is our most profitable and highest value area."

The company's systems and technology sector also improved in the first quarter, rising 5% after dropping 4% in the previous quarter.

"Systems and technology returned to revenue growth this quarter," said Loughridge. "I expect this growth rate to accelerate through 2010."

IBM raised its outlook for the rest of the year, expecting 2010 earnings of at least $11.20 a share, up from $11 per share in its previous forecast.

"I feel good about the guidance and I feel good about the business as we exit the first quarter," Loughridge said.

Despite the company's optimistic outlook and better-than-expected earnings, IBM (IBM, Fortune 500) shares fell more than 2% in after-hours trading.

Moshe Katri, managing director at Cowen and Company, said a "big chunk" of the disappointment among investors was due to weakness in IBM's service bookings, which dropped 2% in the first quarter.

But that's not a reason to give up on the company, said Moshe. Investors who stick with IBM stock will be rewarded in the long run, as increased sales in its services and software sectors continue to spur growth.

"This is a company that has consistently been able to beat expectations," he said. "Assuming the IT spending environment goes back to a somewhat normalized rate, we're going to see [IBM] continue to do pretty well."  To top of page

Index Last Change % Change
Dow 18,493.06 -77.79 -0.42%
Nasdaq 5,097.63 -2.53 -0.05%
S&P 500 2,168.48 -6.55 -0.30%
Treasuries 1.57 0.00 0.06%
Data as of 6:36am ET
Company Price Change % Change
Chesapeake Energy Co... 5.14 -0.25 -4.64%
Micron Technology In... 13.92 0.79 6.02%
Bank of America Corp... 14.37 -0.01 -0.07%
General Electric Co 31.64 -0.42 -1.31%
Yahoo! Inc 38.32 -1.06 -2.69%
Data as of Jul 25
Sponsors

Sections

HSBC banker arrested at JFK airport as he prepared to leave the country. He and former trader face federal charges they manipulated currency trades. More

The typical wage in America is now $828 a week, up from $730 during the depths of the Great Recession. CEOs and Wall Street have noticed and have even started complaining. More

Niantic is worth $3.65 billion, thanks to the runaway popularity of mobile game Pokemon Go, say analysts. More