IBM lifts full year forecast as profits rise

 
Kasmira Jefford
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IBM, the computer services giant, reported a rise in third quarter profits and raised its full year guidance yesterday, helped by steady corporate spending and continued growth in emerging markets.

IBM said its full year operating earnings would be at least $13.35 (£8.47) per share, up 10 cents from its previous forecast of $13.25 per share in July.

Revenues rose eight per cent from a year earlier to $26.2bn, but fell slightly short of analyst expectations, underscoring investors’ fears about slower information technology spending.

US economic worries and the European financial crisis have hurt demand but companies such as IBM that sell hardware and software for data centres powering the Internet have shown resilience.

Third-quarter earnings rose seven per cent to $3.8bn compared with $3.6bn in the third quarter of 2010.

In a statement yesterday, Samuel J. Palmisano, IBM’s chief executive, said growth markets such as India and China delivered “outstanding revenue performance” across software and services, climbing 19 per cent last quarter. The company said revenue in major market countries was flat year to year, with the US up four per cent and Europe and the Middle East up nine percent .

Contract signings for services, which make up about 60 per cent of IBM revenue, slowed to $12.3bn in the third quarter compared to $14.3bn during the second quarter.

At an investor meeting last night, chief financial officer Mark Loughridge said the declines were due to the impact of currency.

Shares fell by 2.07 per cent to $186.59 last night before the results, but fell further in extended trading.