No Big Blues for IBM as earnings top forecasts

NEW YORK (CNNMoney) -- Shares of International Business Machines rose 2.5% in after-hours trading Tuesday following a strong earnings report.

The tech giant said its profits for the fourth quarter rose 16% from last year to $4.18 per share. Net income for the quarter reached a record $5.3 billion, up 9% from the same period a year ago.

Analysts polled by Thomson Reuters expected earnings of $4.08 per share.

IBM (IBM, Fortune 500) also hit record revenue of $29.02 billion, up 7% over the year after adjusting for foreign exchange rates. In addition, IBM said that it expects to deliver full-year 2011 GAAP earnings per share of at least $12.56, and operating (non-GAAP) earnings per share of at least $13.

IBM, which is a component of the blue-chip Dow Jones industrial average, is the world's largest IT company in terms of sales. 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.

IBM chief executive Samuel Palmisano recapped the company's decade in a prepared statement. He pointed out that Big Blue spent almost $60 billion in research and development, acquired 116 companies and paid out $100 billion in dividends to shareholders.

On a conference call, CFO Mark Loughridge said the company had its best quarter in a decade in terms of revenue.

"We continue to improve our mix of business," Loughridge said. "No one can deliver the complement of hardware, software and services that we can."

Growth markets boost results: 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 a large amount of business overseas.

Along those lines, IBM said its results were driven by robust performance in emerging markets such as Brazil, Russia, India and China. Revenues from the so-called BRIC countries jumped 19% in the fourth quarter.

Sales in the United States rose 9% from a year ago, and Asia-Pacific revenues jumped by 14%. By contrast, revenues from Europe, Africa and the Middle East fell 2%.

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 software unit jumped 7%, while hardware sales soared 21%.

New contract signings in the company's services division rose 18% to $22.1 billion, IBM said. Contract signings are considered a barometer of future revenue growth.