IBM Q1 Earnings Beat Street

20 Apr 2010

Big Blue's strong quarterly report indicates growth may be returning to the tech sector.

IBM on Monday reported first quarter earnings that surpassed Wall Street analysts' expectations.

For the period ended March 30, the tech bellwether recorded a 13 per cent increase in net income, to $2.6 billion. Revenue climbed 5 per cent to $22.9 billion, while earnings per share rose 16 per cent, to $1.97.

On average, analysts surveyed by Thomson First Call were expecting EPS of $1.93 and revenue of $22.75 billion for the quarter.

IBM chairman and CEO Sam Palmisano said the company's performance in the first quarter was boosted by IT market trends and IBM's own efforts.

"We drove significantly improved revenue growth rates from the fourth quarter across our businesses and geographies," Palmisano said, in a statement.

"We had strong results in strategic investment areas, including growth markets, business analytics, and Smarter Planet solutions," Palmisano said.

IBM showed solid results across its various product lines.

Sales of business and technology services, which account for about half the company's top line, were up 4 per cent, year-over-year, to $13.7 billion. Software sales jumped 11 per cent, to $5 billion, while hardware sales climbed 5 per cent to $3.4 billion.

IBM raised full-year earnings guidance to at least $11.20 EPS.

The company's stock traded flat most of Monday as investors stuck to the sidelines in advance of the earnings report. IBM shares were up .47 per cent, to $131.24, in early afternoon trading.

The stock closed up 1.22 per cent, to $132.23.

IBM shares have weathered the tech recession better than issues from most of the company's peers. IBM's earnings have held up despite some top-line growth challenges as the company has shifted a greater percentage of work to low-cost destinations like India and South America in recent years.

IBM also has sought to keep a lid on costs by developing and deploying a range of automation technologies that allow the company to provide IT services more efficiently, in some cases via remote data centers and cloud-based offerings.

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