Software growth helps IBM boost 4Q earnings

Published on NewsOK Modified: January 22, 2013 at 6:18 pm •  Published: January 22, 2013
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NEW YORK (AP) — Growing software businesses such as Internet-based computing and data analytics helped IBM boost earnings per share for the 40th consecutive quarter — a full decade — even as revenue was largely flat.

IBM's stock price increased more than 4 percent in after-hours trading following the announcement, as the results seemed to ease investor worries about the uncertain global economy dampening corporate and government spending on technology. The results beat Wall Street's expectations, as is often the case with IBM. The technology bellwether's guidance for 2013 was also stronger than expected.

It has helped that the company has been focusing on growing its software business, which has higher profit margins, over hardware. In fact, software was the only business segment that saw a revenue increase during the quarter.

IBM is seen as a good gauge of technology demand because it sells to major companies and governments around the world. That said, it's not completely immune from economic fluctuations. Its revenue missed Wall Street's expectations in the third quarter, something IBM attributed largely to the economic turmoil in Europe and elsewhere.

IBM said Tuesday that it earned $5.83 billion, or $5.13 per share, in the October-December period. That's up 6 percent from $5.49 billion, or $4.62 per share, in the same period a year earlier.

The results include special items related to acquisitions and to IBM's pension plan. Excluding those items, earnings were $5.39 per share in the latest quarter, above Wall Street's estimates of $5.25 per share.

Revenue slid less than 1 percent to $29.3 billion from $29.49 billion. It would have been flat were it not for currency fluctuations, which translated to fewer dollars IBM made on overseas sales. Analysts polled by FactSet had expected revenue of $29.12 billion.

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