IBM Third-Quarter Profits Beat Estimates

Big Blue's preliminary results show a healthy bottom line in spite of sales that were virtually flat compared with the previous year.

By Paul McDougall
InformationWeek
October 9, 2008 10:18 AM


IBM said Wednesday that third-quarter earnings per share rose 22% year over year to come in at $2.05, beating Wall Street's estimate of $2.01. Revenue, however, fell short of analysts' forecasts. Sales for the quarter increased just 2%, excluding currency benefits, to $25.3 billion, falling short of the $26.53 billion average estimate.
IBM also said it's on track to meet earlier guidance on its full-year results for 2008. It reaffirmed earnings per share of at least $8.75, up 22% from the previous year.

IBM's gross profit margin for the third quarter was 43.3%, up 5% from a year ago. Pre-tax income rose 19% year over year to 3.9 billion. As of the end of the period, the company's free cash flow stood at $6.4 billion while its cash balance was $9.8 billion.

"Our results demonstrate that the combination of a steady base of recurring revenue and profits, investments for growth in emerging markets, a range of products and services that deliver value to clients, and a strong and flexible financial foundation give IBM a competitive edge in good times and tough times," said IBM chairman and CEO Sam Palmisano, in a statement.

"We remain confident in our full-year outlook," Palmisano added.

IBM released the numbers ahead of schedule, a sign that the company is anxious to signal its health to nervous financial markets. IBM plans to deliver a full earnings report on Oct. 16.

Shares of IBM were up 1.84% to $92.22 in morning trading Thursday as technology stocks led a modest rebound in the financial markets.