IBM Just Fine on Top Line

Updated from 4:24 p.m. EDT

IBM(IBM Quote - Cramer on IBM - Stock Picks) delivered first-quarter results largely as expected -- an earnings-per-share figure above analysts' estimates and revenue down 10% but in line with the Street's anticipation.

But investors saw enough to like in the news: Shares of IBM rose $1.04, or 1.3%, to $84.35 in after-hours trading on Instinet following the announcement. The stock also gained earlier in the day, closing the regular session up $1.67, or 2.1%, to $83.39.

The technology giant said after the bell Tuesday that it posted income from continuing operations of $1.7 billion, or $1.08 a share, up from $1.4 billion, or 85 cents a share, a year earlier.

Revenue slipped 10% to $20.7 billion, but was up 4% when adjusting for currency and the divested PC business.

A Thomson First Call survey had expected the company to earn $1.05 a share on revenue of $20.72 billion.

"Overall, IBM hit the first quarter on the button," said Bob Djurdjevic, president of Annex Research, who owns Big Blue shares. "The company is on the slow track to improvement."

IBM's global services unit, which encompasses more than half of the company's business, made $11.6 billion in revenue, a decrease of 1% but up 3% when adjusted for currency. Short-term signings were up 5% and long-term signings were up 20%. New signings for the quarter totaled $11.4 billion, with a backlog of $111 billion.

"We are beginning to see the expected turnaround in our services business, driven by long-term signings growth over the past four quarters," IBM CFO Mark Loughridge said. "We see good opportunities there over the long term."

"For something that had been the crown jewel for IBM, these are small increases," Djurdjevic acknowledged. He will be watching to see if the restructuring of the global services unit into two parts -- global technology services and global business services -- will yield better returns. This was the first quarter that IBM reported global services in two parts.

« Previous Page

1 2

Next Page »