IBM shares rally after strong results

IBM’s results exceeded expectations last night, raising hopes that global companies are becoming confident enough to spend more on technology.

IBM shares rose 2.4 per cent after-hours to $154.34 after the company reported net income for the fourth quarter of $5.3bn (£3.3bn), or $4.18 per share, compared with $4.8bn, or $3.59 per share, a year earlier.

Analysts on average expected earnings per share of $4.08, according to consensus forecasts.

The company yesterday forecast that 2011 earnings per share would rise further still to “at least $12.56”, up from $11.52 in 2010.

The results show that IBM managed to reverse a decline in signings of services contracts, including bookings for outsourcing and other IT projects.

It signed services contracts worth $22.1bn during the quarter, up 18 per cent.

Revenue rose to $29bn from $27.2bn, higher than the market’s forecast for $28.3bn.

Weak signings had been seen as the company’s weak point in recent quarters, and a signal that many corporate clients were wary of multiyear technology investments.