IBM Corp released its third-quarter results ahead of schedule on Wednesday that beat Wall Street’s estimates, sending the company’s stock, a component of the Dow Jones industrial average, up 6 percent in after-hours trading.
The Armonk, New York-based company also reaffirmed its full-year earnings guidance, a strong sign that IBM’s core businesses are holding up well despite the deteriorating US economy.
IBM’s shares have tumbled 31 percent since July on concerns that IBM’s exposure to the crippled financial services industry, which accounts for 30 percent of the company’s sales, would hurt results.
The stock had been performing well for most of the year despite the ailing US economy, rising 25 percent and hitting a 52-week high of US$130.93 on July 24 before the shares started sliding.
IBM said after the market closed on Wednesday that it earned US$2.05 per share in the period from July to last month, US$0.04 higher than the average estimate of analysts polled by Thomson Reuters.
Net income for the period was US$2.8 billion, an increase of 20 percent over the same period last year.
Sales increased 5 percent to US$25.3 billion but fell short of Wall Street’s expectations. Excluding the effects of currency fluctuations, IBM’s sales increased 2 percent.
Analysts were expecting sales of US$26.5 billion, but analysts had started lowering their estimates before Wednesday’s announcement.
They cited the deteriorating economy and a strengthening US dollar as reasons for cutting their forecasts.
A strengthening dollar makes deals done in other currencies worth less when IBM accounts for the sales, which is done in dollars.
IBM maintained its forecast of at least US$8.75 per share in profit this year, a 22 percent improvement over last year.
The results are reassuring in that they suggest that the biggest tech companies are still inking sales deals despite tightened spending, analysts said.
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