IBM Grows 4Q Profit, But Sales Disappoint on Slumped Hardware Demand

By Features FOXBusiness

International Business Machines (IBM) revealed a stronger fourth-quarter profit that just surpassed Wall Street expectations on Thursday, as tighter expenses and software sales helped to offset slumping hardware demand as a result of a downtrodden economy.

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Big Blue reported a profit of $5.5 billion, or $4.62 a share, after the bell, which is up 11% from $5.3 billion, or $4.62, in the year-earlier period.

The Dow component earned $4.71 excluding one-time items, ahead of average analyst estimates of $4.62 in a Thomson Reuters poll.

Revenue for the three-month period was up 2% year-over-year to $29.50 billion, just missing the Street’s view of $29.73 billion.

The gains were led by a 9% increase in software revenue and a 3% improvement in both global technology services and global business services. IBM also saw across-the-board geographic gains, including 3% in the Americas and an increase of 7% in growth markets.

But while the Armonk, N.Y.-based company tightened expenses during the quarter, with total expenses increasing just 2% year-over-year, sales were dragged down by macro headwinds that have weighed on hardware sales.

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IBM chief executive Ginni Rometty said the fourth-quarter performance caps a year of record earnings per share, revenue, profit and free cash flow. He touted the company’s focus on strategic initiatives, including its investment in growth markets and Smarter Planet solutions and cloud.

The company sees fiscal 2012 earnings of at least $14.85 a share excluding special items, which is just slightly better than average estimates of $14.82. Rometty says IBM is on track to deliver earnings of at least $20 in 2015.

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