International Business Machines Corp., the world’s biggest computer-services provider, forecast 2012 earnings exceeding analysts’ estimates after fourth-quarter profit rose 4.4 percent because of rising software demand.
Earnings, excluding some pieces, will building up to no less than $1four.eighty five a proportion this year, Armonk, ny-based IBM mentioned as of late. Analysts projected $14.81, the common of estimates compiled by way of Bloomberg. Fourth-quarter working earnings advanced to $4.71 a percentage, beating the $4.62 analysts predicted.
Virginia “Ginni” Rometty succeeded Sam Palmisano this month, becoming the first female chief executive officer in the company’s 100-year history. She inherits a five-year plan that includes boosting software to half of IBM’s earnings, with a focus on programs that help businesses analyze and project trends, as well as on cloud computing and emerging markets.
“Software was a relative strength,” Shebly Seyrafi, an analyst at FBN Securities in New York with a “sector perform” rating on the stock, said in an interview. “It’s a bit relieving that IBM, which is a bellwether in technology, did not disappoint investors.”
Sales increased 1.6 percent to $29.5 billion, compared with the $29.7 billion analysts had predicted. The euro declined 3.2 percent against the dollar last year amid Europe’s debt crisis. The drop means revenue from Europe, which combined with Middle East and Africa accounts for almost a third of IBM’s sales, is worth less when converted to dollars.
Rometty’s Moves
IBM gained as much as 3.9 percent to $187.50 in extended trading, after closing at $180.52. The shares reached a record in 2011 and rose 25 percent for the year. They had lost 1.8 percent this year as of today’s close.
Rometty, 54, formerly IBM’s sales and marketing head, took the helm Jan. 1 after the succession was announced in October. Palmisano, who had been CEO since 2002, remains chairman.
In her first promotions this month, Rometty named Bruno Di Leo as gross sales and distribution chief and Bridget Van Kralingen as head of consulting, changing a retiring Frank Kern. She additionally named James Bramante senior vice president of expansion markets, an elevated identify as IBM seeks to spice up the unit’s gross sales.
IBM has set goals of adding $20 billion in new revenue, including spending about $20 billion on acquisitions, from 2010 through 2015, as it expands offerings to business customers.
Growth Markets
Fourth-quarter net income rose to $5.49 billion, or $4.62 a share, from $5.26 billion, or $4.18 a share, a year earlier. Operating earnings a year earlier were $4.25 a share.
Profit expansion this year will be “more skewed to the second half,” Chief Financial Officer Mark Loughridge said on a conference call today. IBM has said it targets annual operating earnings of at least $20 a share by 2015.
“We are well on track toward our long-term roadmap for operating earnings,” Rometty said in the statement. “We continued to realize the benefit of our long-term investments in growth markets, business analytics, Smarter Planet solutions and cloud.”
Sales at IBM’s instrument unit rose approximately nine % to $7.6 billion, boosted by means of call for for manufacturers corresponding to Tivoli and Lotus. products and services earnings expansion slowed to three p.c from the third quarter’s eight %, while hardware gross sales fell eight percent.
Backlog, which measures expected future revenue from contracts, totaled $141 billion in the quarter, up $4 billion from the third quarter. Contract signings for services, which make up about 60 percent of IBM revenue, fell 8 percent from a year earlier to $20.4 billion.
Services revenue will rise at least 3 percent this year, based on the backlog growth, Loughridge said.
“We continue to build our momentum in software,” he said. “Our services business delivered powerful margin and profit growth.”
Revenue from expansion markets, equivalent to Brazil, India and China, increased 7 % within the fourth quarter. gross sales from the regions will make up no less than 30 percent of revenue by means of 2015, the company has mentioned, up from 22 p.c in 2011.