International Business Machines (IBM) reported that its revenue grew for the first time in 18 months in another sign of a recovery in the technology sector.
The company raised its profit target for 2010 and reported a stronger-than-expected 9 per cent increase in fourth-quarter earnings as it moved past a slump in corporate IT spending.
IBM, which has spent the past year cutting costs and accelerating its shift to more profitable services and software, said it now expected profit of at least $11 a share in 2010 compared with its previous target of $10 to $11 per share.
The revenue boost in the latest quarter, which ended December 31, was just under 1 per cent. The last time IBM’s revenue rose was the July-September quarter in 2008. Some analysts had worried that IBM would have trouble continuing its streak of using cost cuts to squeeze out higher profits.
Intel offered this earnings season’s first signs of a tech recovery last week. Intel posted higher revenue and the company’s highest-ever gross profit margin, driven in large part by better sales of microprocessors for computers. That showed companies are spending more on their computing systems after keeping tighter budgets during the recession.
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IBM said it earned $4.8 billion, or $3.59 per share. in the past three months of 2009, up from $4.4 billion, or $3.27 per share, a year earlier. Revenue was $27.2 billion, versus $27.0 billion in the fourth quarter of 2008.
IBM shares, however, fell slightly after hours. They have risen nearly 60 per cent over the past year, and finished 1.79 per cent higher on Tuesday at $134.14.
“I think there were some pretty big expectations built in, and you really needed to wow it,” said Stephen Massocca, managing director at Wedbush Morgan.