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IBM Surges on Bullish Outlook

IBM shares surge after the tech giant strengthens its long-term guidance.

ARMONK, N.Y. (

TheStreet

) --

IBM

(IBM) - Get International Business Machines (IBM) Report

shares are surging after the tech giant strengthened its long-term guidance this morning, vowing to almost double its annual profit over the next five years.

IBM CEO Sam Palmisano forecast annual earnings of $20 a share by 2015 at the company's investor meeting on Wednesday. The bullish outlook comes just a few weeks after IBM raised its 2010 EPS guidance to at least $11.20, which was reiterated today.

"We expect to reach at least $20 in EPS by 2015," explained Palmisano during a relatively rare public appearance. "During this period, we anticipate that we will generate $100 billion in cash, of which at least 70 percent will be returned to you, to our investors."

Investors responded positively to the company's projection. IBM shares rose $4.48. or 3.53%, to $131.37 on Wednesday, far outpacing the broader advance in tech stocks that saw Nasdaq gain 1.48%.

>> Who Owns IBM?: Navellier & Associates

During the investor event in New York, Palmisano also predicted that software will become almost half of the company's profit by 2015, and promised to invest around $20 billion in acquisitions over the next five years.

"It means, at current course and speed, that we will invest nearly as much in acquisitions over the next five years as we did over the past ten," he explained.

IBM,

which recently posted strong first-quarter results

TheStreet Recommends

, is famed for its ability to

squeeze profit from high-margin areas such as software and services

. The company's

software chief Steve Mills

has also said that IBM's massive scale lets it solve problems that other firms cannot.

In response to IBM's guidance, analyst firm Collins Stewart reiterated its buy rating and $160 price target for the company today.

-- Reported by James Rogers in New York

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