IBM trounces forecasts with 8pc profit rise

 
City A.M. Reporter
TECH giant IBM’s quarterly profit rose eight per cent from a year earlier, beating Wall Street forecasts, buoyed by strong growth in sales of its computers and software.

The world’s biggest maker of mainframe computers reported second-quarter net income of $3.66bn (£2.88bn), or $3.00 per share, compared with $3.39bn, or $2.61 per share, a year earlier.

Revenue climbed 12 per cent to $26.7bn, helping prompt a rise in full-year forecasts at the firm.

IBM said signings of new business at its services division surged 16 per cent in the second quarter, trouncing expectations and signaling strong spending on technology by corporations.

IBM said that signings rose to $14.3bn during the second quarter, beating Wall Street projections and easing investor concerns after the closely watched number dropped in the first quarter.

Deutsche Bank said in a research note that analysts on average had expected signings of $12bn to $13bn.

Investors believe signings is a key indicator of future profits. But IBM says the focus should be more on total backlog of business, which grew by $15bn during the quarter to $144bn.

“Good service signings reflect that they are capturing their share of the solid IT spending that we’re seeing in the market now,” said Edward Jones analyst Josh Olson.

Analysts said IBM marked a strong start to the tech earnings season, with other bellwethers such as Apple, Intel and Microsoft set to report quarterly results in coming days.