IBM profit jumps, but sales fall short

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- IBM posted second-quarter earnings Monday that beat estimates, but its revenue fell short of forecasts.

The tech giant said its net income for the second quarter rose 13% from last year to $2.61 per share, beating expectations. Net income for the quarter was $3.4 billion, up 9% from last year.

Analysts polled by Thomson Reuters expected earnings to be $2.58 per share.

Sales for the Armonk, N.Y., company rose 2% to $23.7 billion, which missed analysts' forecast of $24.17 billion.

IBM, which is a component of the blue-chip Dow index, is the world's largest IT company. Wall Street looks to Big Blue's earnings as an indicator of how much businesses are spending on technology.

The traditionally insulated tech sector has not been immune to the global recession, but experts have been looking for tech firms' earnings to start improving on rebounding demand from business customers.

But Mark Loughridge, IBM's chief financial officer, protested when an analyst suggested that IBM's results imply that IT demand lagging.

"I wouldn't take this as a pullback in spending," Loughridge said on a conference call following IBM's earnings report. "We saw a lot of strength in sectors like software, which had a very strong third month of the quarter."

Monday's report marked the first time in a year that IBM missed revenue estimates. But the company has fallen short of analysts' revenue forecasts for four out of the last eight quarters.

IBM raised its full-year earnings guidance to $11.25 a share, but that too was below analyst expectations.

Shares of IBM (IBM, Fortune 500) fell 4% in after-hours trading. 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 17,776.91 93.33 0.53%
Nasdaq 4,997.46 5.52 0.11%
S&P 500 2,081.34 12.58 0.61%
Treasuries 2.23 -0.05 -2.06%
Data as of 6:25pm ET
Company Price Change % Change
Bank of America Corp... 16.69 -0.25 -1.48%
Apple Inc 125.69 -0.31 -0.25%
Micron Technology In... 18.20 -0.12 -0.66%
Freeport-McMoRan Inc... 17.25 -0.59 -3.31%
Intel Corp 29.90 -0.14 -0.47%
Data as of 4:04pm ET
Sponsors

Sections

Jared Fogle's weight loss success story is well known. But the success of Subway, the sandwich chain he's promoted for 16 years, is less well known. More

Facebook's Sheryl Sandberg is joining the board at SurveyMonkey, her late husband's online survey and polling company. More

Entrepreneur Guillaume Gauthereau is on a mission to build a 50 to a 100 acre sanctuary in New York to provide refuge to honey bees. More

The FTC and Florida's attorney general claim a debt relief operation has made millions from consumers by promising to help get them out of credit card debt, but instead stuck them with even more. More