Business services sales, which includes consulting, fell 2.8 percent to $4.58 billion, the company said today in a statement. Profit in 2010 will be at least $11 a share. IBM set a goal in May 2007 for earnings of $10 to $11 this year.
IBM’s business customers, still reining in costs in the wake of the recession, aren’t resuming consulting contracts as quickly as other technology spending. Still, Armonk, New York- based IBM’s focus on software and services has helped it boost earnings.
“The consulting business is lumpy and choppy,” said Andy Miedler, an analyst at Edward Jones & Co. in St. Louis. “This is going to be an area that takes time to rebound a bit. The consulting is the more discretionary part of the business.”
IBM dropped 2 percent in late trading to $131.41 after climbing $2.36 to $134.14 at 4 p.m. on the New York Stock Exchange. The shares gained 56 percent last year.
Miedler, who has a buy rating on the stock and doesn’t own it, said the shares also fell because the forecast was built into expectations. Paul Meeks, a principal at Winsor Asset Management, agreed, calling today’s report “incremental good news.”
“I don’t know I’d be a buyer of shares at this level,” said Meeks, who is based in Mount Pleasant, South Carolina. “I think they’re pretty expensive.”
Fourth-Quarter Results
While consulting services dropped, IBM said sales of technology services, which includes outsourcing, gained 4.4 percent to $10.1 billion. Software sales rose 2.4 percent last quarter to $6.58 billion.
IBM’s fourth-quarter profit amounted to $4.81 billion, or $3.59 a share, compared with $4.43 billion, or $3.27, a year earlier. Analysts projected $3.47 a share. Sales advanced 0.8 percent to $27.2 billion.
The company cut costs in the period by 5.1 percent, helped by a 58 percent reduction in interest expenses.
IBM, once the largest computer company, has spent the past decade selling off what executives call “commoditized” hardware units, such as the personal-computer group, to invest in the more profitable businesses of software and services.
Those divisions helped expand profit margins, the percentage of sales left after costs, for nine straight quarters. It reached 48.3 percent last quarter, up from 38.8 percent at the end of 2002, the year Chief Executive Officer Sam Palmisano took the helm. IBM also boosted profitability by cutting at least 10,000 jobs last year, shifting work overseas and standardizing software across different services.
Source : http://www.bloomberg.com/apps/news?pid=20601103&sid=a5oKTsDwIX8s
IBM’s business customers, still reining in costs in the wake of the recession, aren’t resuming consulting contracts as quickly as other technology spending. Still, Armonk, New York- based IBM’s focus on software and services has helped it boost earnings.
“The consulting business is lumpy and choppy,” said Andy Miedler, an analyst at Edward Jones & Co. in St. Louis. “This is going to be an area that takes time to rebound a bit. The consulting is the more discretionary part of the business.”
IBM dropped 2 percent in late trading to $131.41 after climbing $2.36 to $134.14 at 4 p.m. on the New York Stock Exchange. The shares gained 56 percent last year.
Miedler, who has a buy rating on the stock and doesn’t own it, said the shares also fell because the forecast was built into expectations. Paul Meeks, a principal at Winsor Asset Management, agreed, calling today’s report “incremental good news.”
“I don’t know I’d be a buyer of shares at this level,” said Meeks, who is based in Mount Pleasant, South Carolina. “I think they’re pretty expensive.”
Fourth-Quarter Results
While consulting services dropped, IBM said sales of technology services, which includes outsourcing, gained 4.4 percent to $10.1 billion. Software sales rose 2.4 percent last quarter to $6.58 billion.
IBM’s fourth-quarter profit amounted to $4.81 billion, or $3.59 a share, compared with $4.43 billion, or $3.27, a year earlier. Analysts projected $3.47 a share. Sales advanced 0.8 percent to $27.2 billion.
The company cut costs in the period by 5.1 percent, helped by a 58 percent reduction in interest expenses.
IBM, once the largest computer company, has spent the past decade selling off what executives call “commoditized” hardware units, such as the personal-computer group, to invest in the more profitable businesses of software and services.
Those divisions helped expand profit margins, the percentage of sales left after costs, for nine straight quarters. It reached 48.3 percent last quarter, up from 38.8 percent at the end of 2002, the year Chief Executive Officer Sam Palmisano took the helm. IBM also boosted profitability by cutting at least 10,000 jobs last year, shifting work overseas and standardizing software across different services.
Source : http://www.bloomberg.com/apps/news?pid=20601103&sid=a5oKTsDwIX8s
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