IBM's stock has risen 45% this year, as investors have warmed to the company's growing reputation as a recession-buster. One of the big success stories of the economic slowdown, IBM continued its margin growth in the third quarter, despite year-over-year revenue declines in most of its business units. Software led the way during the third quarter with a gross profit margin of 85.7% and the company pushed its overall margin up by almost two percentage points to 45.1%.
"Software was the key profit driver for IBM during its expansion over the past six years, and continues to drive profit growth even during the recession," wrote Allan Krans, a senior analyst at TBR, in a note released Friday. "Although IBM was outpaced in growth by more aggressive competitors such as Microsoft (MSFT - Get Report) and VMware (VMW - Get Report) during positive economic conditions, IBM Software is maintaining much more consistent performance during the recession."
Microsoft, in contrast, has been hit with falling sales, and VMware has seen a significant slowdown in its recent explosive growth.