IBM tops estimates, but shares fall

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- Now that IBM is a hot momentum tech stock, it suddenly has to live up to some lofty forecasts.

The company commonly known as Big Blue reported better-than-expected third-quarter earnings Monday, but shares fell in after-hours trading after closing at a new all-time high.

Net income for the quarter was $3.6 billion, up 12% from last year. The tech giant said earnings per share rose 18% from last year to $2.82 per share. Analysts polled by Thomson Reuters expected earnings to be $2.75 per share.

Sales for the Armonk, N.Y., company rose 3% to $24.3 billion, which topped targets of $24.13 billion. Including the benefit of positive currency exchange rates, revenues rose 4%.

IBM chief executive Samuel Palmisano said in a statement that the company is well positioned to continue earnings and sales growth in the future. Looking ahead, he said he is "confident" that IBM will report full-year 2010 earnings per share of at least $11.40.

Analysts currently are predicting the company will report full year earnings of $11.30 per share.

"We continued our steady improvement in the business," Mark Loughridge, IBM's chief financial officer, said in a conference call with analysts. "We used our strong profit and cash position to invest for future growth."

Despite the strong results, shares of IBM fell more than 3% after hours. IBM (IBM, Fortune 500)'s stock rose more than 1% in regular trading Monday. Another prominent tech stock, Apple (AAPL, Fortune 500), reported better-than-expected profits Monday afternoon as well. Its stock also dropped after hours.

IBM has benefited as corporate spending on information technology has remained healthy despite the sluggish economic recovery. It has also been helped by the weak dollar, which boosts profits for companies that do business overseas.

Along those lines, IBM said its results were driven by robust performance in emerging markets such as Brazil, Russia, China and India. Revenues from the so-called BRIC countries jumped 29% in the quarter.

By contrast, sales in the United States rose 3%, while revenue from Europe, Africa and the Middle East fell 6% in the quarter.

IBM reported gains across all of its business units.

Sales in its global services division were up 2% in the quarter, IBM said. Revenue from its hardware unit jumped 10%, while software sales edged up 1%.

However, new contract signings in the company's services division were down 7% to $11 billion, IBM said. Contract signings are considered a barometer of future revenue growth.

IBM said that if an outsourcing contract signed Oct. 8 is included, total signings would have been $12.7 billion in the quarter.  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 17,814.94 -2.96 -0.02%
Nasdaq 4,758.25 3.36 0.07%
S&P 500 2,067.03 -2.38 -0.12%
Treasuries 2.24 -0.02 -0.66%
Data as of 9:02am ET
Company Price Change % Change
Huntington Bancshare... 10.11 -0.07 -0.69%
Kinder Morgan Inc 40.75 -0.04 -0.10%
AT&T Inc 34.82 0.12 0.35%
Intel Corp 36.32 0.07 0.19%
Cisco Systems Inc 27.28 0.25 0.92%
Data as of Nov 25

Sections

Tea maker Tetley has insured one of its most valuable assets for $1.6 million - the tongue of its top tea taster. More

More retailers start their deals on Thanksgiving, but it's merely shifted some customers from Black Friday to Thursday. More

Sales of iPads and other tablets are slumping badly in 2014, and won't likely be a big hit during the holidays as they were last year. More

Ever since the Ebola epidemic erupted in her hometown of Foya, Liberia, Deboriah Foko has been working with Doctors Without Borders to inform others about this deadly virus. Here are journal entries from a day in her life. 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: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. 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 2014 and/or its affiliates.