IBM Shares Fall On Slower Growth Forecast

PHILADELPHIA (AP) — Shares of IBM Corp. fell Friday after the computer giant sent signals to investors that business, while improving, hasn't returned to normal levels.

Shares of the Armonk, N.Y.-based company declined $6.37, or 5 percent, to $121.61 in midday trading.

IBM made the disclosure when it reported third-quarter earnings Thursday that were higher than a year ago and beat analysts' expectations, even as sales fell.

BMO Capital Markets analyst Keith Bachman said that IBM's fourth-quarter earnings forecast was "conservative," with a projected 45 percent increase from the third quarter. The 3-year average increase was 60 percent sequentially.

He also said that growth rates for IBM's consulting and integrated services businesses will continue to show declines until the second half of 2010.

Moreover, Bachman said growth rates for IBM's business segments were not as good as those of other technology companies, such as NetApp Inc., EMC Corp. and Intel Corp.

The analyst, however, raised his 2009 earnings estimate by 7 cents to $9.87 per share.

In the third quarter, IBM reported revenue of $23.6 billion, down 7 percent from a year ago. Earnings rose by 14 percent to $3.2 billion, or $2.40 per share.