IBM Joins Tech Doghouse

For the quarter, IBM earned $3.54 billion, or $2.31 a share, vs. $3.19 billion, or $1.99 a share, in the same quarter 2005.

On a continuing operations basis, the company made $2.26 a share, including a 6-cent-a-share tax benefit. Without the benefit, IBM earned $2.20 a share, besting Thomson Financial analyst estimates by a penny.

Revenue totaled $26.3 billion, compared with $24.4 billion for the fourth quarter a year ago. Analysts polled by Thomson Financial had forecast $25.66 billion.

"I was impressed with the revenue," says Sushi Wagle, senior vice president of investments at J&W Seligman, which does not currently own shares but has in the past. "The bookings on the services front were very solid. Where the results got a little mixed was on the hardware side."

He'd look for an entry point in the shares between $88 and $92, where shares would trade at around 13.5 times 2007 earnings, give or take a few points.

"All in all, I think it was a very solid quarter," Wagle says. "Apple had a solid quarter, too, but people sold it like crazy."

IBM CFO Mark Loughridge said late Thursday that software sales grew at its fastest clip in five years to $5.65 billion, rising 14%, or 11% at constant currency, from the year-ago quarter.