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IBM Sees Earnings Jump, Raises Outlook

19 July 2012 08:25 (UTC +04:00)

Baku - APA-Economics. IBM shares are up modestly in late trading after a mixed earnings report that saw the bottom line rise and the top line contract, while the company raised its full-year profit forecast, Wall Street Journal reported.

IBM reported net income of $3.9 billion, or $3.34 a share, up from $3.7 billion, or $3.30 a share. On an operating basis, earnings were $3.51 a share, better than Street consensus of $3.42. But revenue of $25.8 billion fell 3% from a year ago, and missed Street expectations of $26.28 billion.

It was the fourth straight quarter in which the top line missed estimates.

Investors are not particularly impressed; shares are up 1.7% in late trading at $191.50.

Among the companyâ€™s divisions, revenue for the services unit fell 2%, was flat in the software division, and fell 9% in hardware.

Revenue in the Americas â€” IBMâ€™s largest market â€” was down 1%, and up 1% adjusting for currency impacts. Total sales in Europe, the Middle East and Africa decreased 9%, and was flat when adjusted for currency. Total revenue in Asia gained 2%, or up 4% adjusted for currency.

The companyâ€™s margins were better: gross profit margin rose to 47.6% from 46.4%. The company also noted that operating expenses were down 6%, to $7 billion. Combined with the revenue drop, you can draw the conclusion that IBM wrung that profit gain out of cost cutting rather than expanding its business.

The company did boost its earnings forecast for the year, however. The company expects 2012 EPS will hit $14.40, up from its previous estimate of $14.27 ($15.10 vs. $15 on an operating basis).