IBM’s 1st-Quarter Profit Eroded by Dollar’s Rise

International Business Machines Corp. on Wednesday reported a 1.2% drop in first-quarter profit as revenue from computers and software was dragged down by a sharp rise in the dollar’s value.

The slower growth in revenue overshadowed surging demand for computer services from the world’s largest computer company.

Still, IBM managed to beat analysts’ expectations for profit on a per-share basis, which were boosted by the company’s repurchase of $2 billion in stock during the quarter.

IBM said it earned just under $1.2 billion, or $2.37 per share, in the three months ended March 31. That compared with earnings of $1.21 billion, or $2.21 per share, in the year-ago period, excluding a charge associated with acquisitions.

Analysts had predicted an average $2.30 profit, with a range from $2.10 to $2.40.

Analysts had widely expected IBM’s profit to be eroded by the dollar’s sharp rise against European currencies and the Japanese yen this year, and it cut the company’s earnings by 19 cents a share in the period. The drag on profit was particularly evident in IBM’s European business, where revenue fell 7% to $5.3 billion.

“I feel we are performing in line with our objectives,” Chief Financial Officer G. Richard Thoman said in a teleconference call with analysts and reporters.

The news was released after the close of financial markets, but IBM stock has risen sharply this week in anticipation of the figures. The company’s stock rose $2.375 to close at $142.375 on the New York Stock Exchange.

Meanwhile, U.S. Robotics reported a strong 77% jump in fiscal second-quarter profit, citing strong demand for its products, especially its new, speedy x2 modems.

The world’s largest consumer modem maker posted net income of $91.5 million, or 95 cents a share, versus $51.6 million, or 55 cents a share, in the year-ago quarter.

The latest results included a tax benefit of $17.9 million, or 18 cents a share, from its acquisition of Scorpio Communications Inc.

At a Glance:

Cirrus Logic Inc. reported a big, unexpected loss for its fiscal fourth quarter and said it plans to lay off 400 people, or 15% of its work force. Cirrus reported a loss from operations, excluding charges, of $1.5 million, or 2 cents a share, compared with a loss of $88.4 million, or $1.38, a year ago.

Netscape Communications Corp.’s first-quarter earnings exceeded expectations by a penny amid continued demand for software that sets up corporate computer networks using Internet technology. Net income rose to $7.94 million, or 9 cents a share, from $3.58 million, or 4 cents, in the year-earlier period.

Tandy Corp. said its first-quarter earnings jumped 77% to $25.6 million, or 43 cents a share, compared with $14.5 million, or 21 cents a share, in the same quarter a year ago.

Read-Rite Corp. reported fiscal second-quarter net income of $23.5 million, or 48 cents per share, compared with $1.3 million, or 3 cents, a year ago.

PeopleSoft Inc. reported better-than-expected first-quarter earnings of $17.8 million, or 14 cents a share, from $9.5 million, or 8 cents, a year earlier.

Tandem Computers Inc. posted fiscal second-quarter net income of $26 million, or 22 cents per share, including a gain of $1 million, or 1 cent, for the sale of a subsidiary. That compares with a loss of $49.6 million, or 42 cents, in the year-ago quarter.

Alliance Semiconductor Corp. reported a fiscal fourth-quarter net loss of $2.8 million, or 43 cents, compared with a loss of $26.4 million, or 69 cents, a year ago.

* MORE EARNINGS: D2