PC Sales Dip Dents IBM Profit

IBM Corp., the largest seller of computers and related services, reported a 13% decline in fourth-quarter profit on lower revenue from personal computers and custom chips.

IBM shares fell on the news to $114.65 in after-hours trading after closing at $119.90, up $2.65, on the New York Stock Exchange.

Net income in the fourth quarter fell to $2.33 billion, or $1.33 a share, from $2.67 billion, or $1.48, a year earlier, IBM said. The results were a penny better than the $1.32 a share analysts had forecast, according to Thomson Financial/First Call.

Revenue fell 11% to $22.8billion, compared with $25.6 billion a year earlier. That fell short of analysts’ average estimate of $23.8 billion.

IBM’s multiyear contracts to run clients’ computer networks, plus sales of high-margin database and Web management software, have made the company a haven for investors as technology spending slowed.

“It’s been a tough year, but our fourth-quarter results were strong relative to our competitors,” Chief Financial Officer John Joyce said during a conference call.

The company said profit edged out forecasts because of strong sales of products with high profit margins, including mainframe computers, high-performance Unix servers and software.

The rise in mainframe computer sales was the first since 1989. Its Regatta servers, which run on the Linux operating system, sold out completely, IBM said.