IBM 4Q earnings beat estimates, revenue falls shy

SAN FRANCISCO – IBM Corp.’s fourth-quarter earnings handily beat Wall Street’s expectations on Thursday, helped by higher income and profit margins in the technologies icon’s lucrative software package and services segments.
The outcomes and IBM’s stronger-than-expected outlook for this year sent IBM’s stock up much more than 2 percent following hours. The organization offered a welcome sign of stability amid the global economic turmoil that’s prompting worries about a slowdown in technologies spending by corporations and governments, who are IBM’s consumers.
A single sore spot was revenue, which fell brief of analyst expectations the rise in software and services income wasn’t sufficient to offset a decline in hardware. Also, the stronger dollar is squeezing overseas revenue.
IBM earned $ five.49 billion, or $ four.62 per share, in the 3 months that ended Dec. 31. That is up 4 percent from $ 5.26 billion, or $ 4.25 per share, a year earlier. Adjusted earnings had been $ four.71 per share, effortlessly surpassing analysts’ expectations of $ four.61 per share.
Revenue grew two percent to $ 29.49 billion from $ 29.02 billion. Analysts polled by FactSet had expected slightly higher income of $ 29.7 billion.
IBM said currency shifts given that its final quarterly report in October lowered fourth-quarter revenue by about $ 300 million. The deepening economic crisis in Europe, along with the continuing weakness in the U.S. economic climate and signs of a slowdown in emerging markets are prompting worries about international firms like IBM.
But IBM has extended stated its lengthy-term contracts insulate it from economic swings, and its complete-year forecast is vivid. IBM expects adjusted earnings of at least $ 14.85 per share, above the $ 14.77 per share that analysts are predicting.
New CEO Ginni Rometty stated IBM is “well on track” toward its long-term objective of hitting at least $ 20 per share in adjusted earnings in 2015 &mdash a rare example of a extended-term earnings target disclosed publicly by a such a large organization.
Income rose at two of IBM’s 3 largest divisions &mdash software package by 9 percent and services by three percent. Hardware income fell 8 percent. In the third quarter, IBM’s services income grew 8 percent, its software package revenue climbed 13 percent and its hardware revenue rose 4 percent.
By geography, IBM stated income from the Americas grew three percent in the fourth quarter. Revenue from Europe, the Middle East and Africa combined was up 1 percent and revenue from Asia increased 2 percent.
IBM said its new contract signings had been $ 20.four billion in the fourth quarter, slightly above analysts’ expectations. The company’s services backlog at the end of the year was $ 141 billion, up by $ 4 billion from the finish of the third quarter. Services backlog refers measures the value of perform beneath contract that the firm expects to book as income in future quarters.
For all of 2011, IBM earned $ 15.86 billion, or $ 13.06 per share, up 7 percent from $ 14.83 billion, or 11.52 per share, a year earlier. Adjusted earnings were $ 13.44 per share, above analysts’ expectations of $ 13.36 per share.
Revenue was $ 106.92 billion, up 7 percent from $ 99.87 billion in 2010. Wall Street was expecting $ 107.08 billion.
The Armonk, N.Y.-based company’s stock rose $ four.53, or 2.five percent, to $ 185.05 right after hours. The stock had closed down 55 cents at $ 180.52.