Restructured IBM to Post Quarterly Gain

IBM Corp., the world’s largest computer company, today is expected to report its first year-over-year quarterly earnings rise in nearly two years, helped by job cuts and the closure of some chip-making operations.

The restructuring of the Armonk, N.Y., firm -- whose businesses include computer services, hardware and software -- is paying off, analysts said, and revenue growth is likely to be near Wall Street expectations.

IBM, like many technology companies, cut costs last year as it faced an extended downturn in corporate spending on technology that continues to show no real signs of a rebound.

The spending downturn has held back growth in IBM’s large services division, and the rate of new contract signings has slowed. Analysts said they would look closely at orders for that services business.

The downturn also has hurt sales of semiconductors, hardware and software at IBM and its competitors.

Investors expect Big Blue to return to the steady earnings growth that had been its hallmark during the last decade up until 2002, when the downturn and extraordinary charges pushed it into the red for the first time in almost a decade.

Investors have stood behind IBM’s shares this year, pushing them up 2% in 2003 compared with a loss of 8% in the broader American Stock Exchange Computer Hardware index.

“I think they are probably going to make the quarter pretty close to what people are looking for,” said John Rutledge, portfolio manager at the Evergreen Technology Fund, which owns IBM shares. “It’s a pretty easy comparison because last year’s March quarter was really kind of depressed.”

Analysts expect IBM to report earnings of 80 cents a share compared with 68 cents a year earlier.