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7/18/2011
05:08 PM
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IBM Profits Jump 11% In Second Quarter

Big Blue raises guidance on strength of solid growth across full range of enterprise IT offerings; BI and cloud technologies star.

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IBM beat estimates for its second quarter Monday, as earnings per share increased 18% year-over-year to $3.09 while revenue climbed 5%, excluding currency gains, to $26.7 billion. Net income rose 11%, to $3.8 billion.

Wall Street analysts were, on average, expecting Big Blue to post quarterly earnings of $3.03 per share on revenue of $25.35 billion.

After seeing growth across all key metrics, IBM raised its full-year 2011 guidance for operating EPS to $13.25. IBM has said publicly that it's targeting EPS of $20 by the year 2015.

CEO Sam Palmisano said the strong quarter was due in part to expansion into high-growth areas like business intelligence and cloud computing at IBM, which is celebrating its 100th anniversary this year.

"In the second quarter our long-term strategic investments in the company's growth initiatives again helped drive strong revenue performance," Palmisano said in a statement. "As IBM begins its second century, we continue to lead in the future and deliver higher value to our clients and our shareholders."

IBM saw growth across the breadth of its product portfolio--a sign that enterprise spending on IT products and services is holding up despite uncertainty about the broader economy.

Total services revenues increased 2%, after excluding currency-related gains, to $15.1 billion. The company's services backlog as of June 30 was $144 billion, up $2 billion from the previous year excluding currency. Software sales rose 10% year-over-year, to $6.2 billion, while revenue from sales of servers, mainframes, and other hardware was up 12%, to $4.7 billion.

IBM shares were up more than 2% in after-hours trading. The company's shares closed down 0.15%, to $175.28, in regular trading Monday.

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