IBM to double profit by 2015

City A.M. Reporter
IBM said it expects its profit to roughly double to more than $20 a share by 2015, helped by growth in emerging markets as well as the company’s push into high-margin technology services and software businesses.

IBM chief executive Sam Palmisano told an annual investor briefing yesterday that the company expects earnings per share (EPS) of “at least $20” for 2015.

The company reported EPS of $10.01 a share in 2009, and yesterday reiterated its forecast for EPS of “at least $11.20” for 2010.

IBM , over the past decade, has been shifting its focus to the more profitable technology services and software from commoditized hardware products.

“More and more of our profits will come from these higher profit segments,” Palmisano said.
He also said IBM would benefit from expansion in fast-growing markets like China, where a burgeoning middle class means greater technology spending.

He forecast that by 2015, around 25 per cent of its revenue would come from growth markets compared with around 19 per cent last year.

Palmisano said the company planned to spend around $20bn in acquisitions through 2015. For all of 2009, IBM spent $1.5bn on acquisitions, including a $1.2bn cash deal for business analytics company SPSS.

He said despite the higher spending, the company would remain “very shareholder-friendly.”

The outlook was an update to IBM’s long-term road map given in 2007, in which it targeted EPS of around $10-11 by 2010. In May 2007 it introduced a three-year plan to achieve $10 per share by the end of 2010. It hit that target at the end of 2009.