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

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 17,279.74 13.75 0.08%
Nasdaq 4,579.79 -13.64 -0.30%
S&P 500 2,010.40 -0.96 -0.05%
Treasuries 2.59 -0.04 -1.60%
Data as of 10:38am ET
Company Price Change % Change
Yahoo! Inc 40.93 -1.16 -2.74%
Microsoft Corp 47.52 0.84 1.80%
Bank of America Corp... 16.95 -0.09 -0.53%
Oracle Corp 39.80 -1.75 -4.21%
Facebook Inc 77.91 0.91 1.18%
Data as of Sep 19

Sections

Law enforcement officials say Frank Tamayo was the middleman in a $5.6 million insider trading scheme that involved him eating pieces of paper to cover up the crime. More

The Bill and Melinda Gates Foundation has given more money than many western nations. More

It's really good to be Larry Ellison. The Oracle founder is stepping down as CEO, so maybe he'll have more time to enjoy his glamorous life. More

As Occupy Wall Street goes on its debt-abolishing tear, thousands of people across the country are begging them to forgive their loans. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.