IBM Says Quarterly Earnings Are Up 12%

IBM Corp. on Tuesday posted a 12% jump in quarterly profit as solid year-end product sales were buoyed by a weaker U.S. dollar.

Shares rose slightly as IBM posted broad-based sales gains across all its major product lines, regional markets and target customer segments.

More than half of the gains was due to favorable effects of currency instead of underlying growth. But IBM Chief Financial Officer Mark Loughridge cited increased spending on information technology infrastructure as one reason for Big Blue’s strength.

“It’s not just about infrastructure,” he said in a conference call with financial analysts. “Several factors, including increasing complexity of globalization, are driving customers to expand their needs.”

IBM reported net income of $3.04 billion, or $1.80 a share, in the quarter, compared with $2.71 billion, or $1.55, a year earlier. Income from continuing operations was $3.1 billon, or $1.81 a share, up from $2.72 billion, or $1.56.

The rise in profit per share benefited from IBM’s policy of buying back stock to cut its total share count -- in effect, boosting reported profit.

“It looks like earnings were solid from top to bottom,” said Steve Neimeth, a portfolio manager for AIG SunAmerica. “As a bellwether for the industry, other technology stocks should rally on these earnings.”

IBM’s revenue from continuing operations was $27.7 billion, up 7%. But core growth, excluding the positive effect of translating foreign sales into a weaker U.S. dollar, was only 3%.

For the 2004 year, IBM reported revenue of $96.5 billion.

Wall Street’s profit forecasts of $1.74 to $1.78 a share had inched up in recent weeks as analysts factored in the positive effect on earnings of translating overseas sales into U.S. dollars.

Shares of IBM rose 80 cents to $94.90 on the New York Stock Exchange. They rose to $95.10 in after-hours trading.