Big Blue Storms Past 3Q Estimates

IBM hurdles estimates, raises outlook on strong software, hardware sales.

IBM easily exceeded analysts' estimates in its third quarter, posting a profit of $3.6 billion, or $2.82 a share, on sales of $24.3 billion.

A survey of analysts by Thomson Reuters pegged IBM (NYSE: IBM) for a profit of $2.75 a share on sales of $24.1 billion.

IBM shares closed up $1.77, or 1 percent, to $142.83 ahead of the earnings report before moving up another $0.10 in after-hours trading.

The $24.2 billion in sales marks a 3 percent improvement from the year-ago quarter when it earned $3.2 billion, or $2.40 a share, on sales of $23.56 billion.

"In the third quarter we grew revenue in our hardware, software and services businesses, expanded margins and again increased earnings per share at double digits," IBM CEO Sam Palmisano said in a statement accompanying the financial report. "We achieved excellent performance in our growth markets unit, reflecting sustained investments through the downturn and the continued strength of the infrastructure build-out in these countries."

IBM similarly shattered analysts' estimates last quarter when it posted a profit of $3.4 billion, or $2.61 a share, on sales of $23.7 billion.

At the time, Big Blue upped its sales and earnings forecast for the remainder of the fiscal year, citing better-than-expected demand from enterprise customers in the U.S. and abroad.

On Monday, IBM kept the momentum going by again raising its fiscal-year profit forecast from $11.25 a share to "at least $11.40 a share."

"Looking ahead, we are uniquely positioned in the enterprise, investing in high value segments like business analytics, advanced systems and smarter planet solutions," Palmisano said.

In the quarter, IBM said sales in emerging and growth economies rose 16 percent while sales to companies in Brazil, Russia, India and China (BRIC) soared up 29 percent.

Its systems and technology unit posted a 10 percent surge in sales while its System z mainframe group posted a 15 percent increase in total sales compared to the year-ago quarter.

Software sales rose 4 percent and services checked in with a 2 percent gain.

IBM said it exited the third quarter with a services backlog of $134 billion, up $5 billion sequentially and flat from the year-ago quarter.

Larry Barrett is a senior editor at, the news service of, the network for technology professionals.

Tags: services, software, IBM, earnings, hardware

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