IBM has surprised analysts by giving them a better forecast for 2013 than they expected.
The company already had a solid fourth quarter despite economic doom which saw most of its customers hold off on IT purchases.
In the US, companies were not spending anything until the government sorted out its bizarre fiscal cliff stand-off. IBM said its quarterly results beat forecasts and it plans to achieve better than expected earnings next year too.
Some analysts think IBM’s earnings may be a sign of an improved tech spending environment, but others, who don’t like being surprised by Big Blue, think that the strong results were specific to IBM’s business model.
Cindy Shaw, managing director at Discern, told Reuters that IBM is better positioned for a tough environment thanks to getting rid of its hardware and buying PriceWaterhouse’s consulting business.
At the moment IBM is better than most, other than Accenture, at solving business problems.
IBM was good in “hot growth markets” such as data analytics, cloud computing, and emerging markets. In fact, all those buzz word areas that other tech companies say they are heading towards, IBM has already been there and sent the others a postcard.
Sterne Agee analyst Shaw Wu added that the idea of vertical integration of hardware and software has been difficult for other companies to copy. This is mostly because IBM has been at it longer and customers are used to the reassurance of the men in suits. IBM has a much stronger offering and brand name, Wu said.
Quarterly net income rose 10 percent to $6.1 billion. Revenue dropped one percent to $29.3 billion due to the sale of its retail business in the third quarter.
Analysts thought IBM would report net income of $5.95 billion, or $5.25 a share, on revenue of $29.05 billion.
Revenue grew in particular because of an 11 percent increase in Brazil, India, Russia and China. The company’s software revenue was up three percent in the quarter.