IBM sees profits soar

IBM has beaten profit forecasts for Q4, with net income rising nine percent to a record $5.3 billion.

Sales climbed seven percent to a record revenue of $29 billion, the company reported late yesterday, thanks to businesses spending more on outsourcing contracts and mainframes.

IBM, which has been concentrating on the services and software part of its business over the past decade and moving away from hardware manufacture, said it signed services contracts worth $22.1 billion during the quarter – an increase of 18 percent.

The new System z mainframe line also helped boost sales, with revenue up 69 percent compared to the previous year.

The New York-based tech giant reported a growing backlog of unfinished work in the services business – an estimated $142 billion worth, up $5 billion year on year.

It signed services contracts worth $22.1 billion in the quarter, up 18%, and 19 of these contracts were reported to be greater than $100 million.

“We completed an outstanding year, with record profit and free cash flow, and exceeded the high end of our 2010 earnings per share roadmap objective,” said IBM chairman, president and chief executive officer Samuel J Palmisano (pictured).

“We also capped a decade in which our shift to high-value businesses, our global integration of IBM, our investment in research and development of almost $60 billion and our acquisition of 116 companies have helped us to nearly triple our EPS and return more than $100 billion to shareholders.

“As IBM enters its second century, we will continue to focus on our long-term strategic initiatives –  growth markets, Smarter Planet Solutions, cloud and business analytics – as we drive to achieve our new roadmap target of operating earnings per share of at least $20 in 2015.”

The quarterly results meant net income for the full year ended December 31, 2010 reached $14.8 billion, up 10 percent on the previous year. Sales for 2010 were $99.9 billion, up four percent.

Meanwhile, AP reported that IBM’s chief financial officer, Mark Loughridge, was bullish about continued growth in Q1 of 2011.

During a conference call, Loughridge said: “If you look at the first quarter of 2011, I expect that as we’ve studied it, it will be very similar in nature to our fourth quarter.

“In other words, really driven by the hardware and software transactional elements of our business.

“So as we go from the fourth quarter to the first quarter, once again we expect to see double-digit revenue growth out of both the hardware and software sides of our business.”