IBM Profit Is Helped by Spinoff of PC Unit

Job cuts and the spinoff of the personal computer division aided third-quarter profit at IBM Corp., which beat analysts’ forecasts despite a slight revenue shortfall.

In the three months ended Sept. 30, IBM earned $1.52 billion, or 94 cents a share, on revenue of $21.5 billion.

In the same period last year profit was $1.55 billion, or 92 cents, on revenue of $23.3 billion.

But comparisons are complicated because last year’s figures included IBM’s personal-computer division, which since has been sold to China’s Lenovo Group Ltd. The year-earlier quarter also included a one-time charge of $320 million from settling a pension-related lawsuit.

Without that charge and the PC operations, IBM’s continuing operations earned $1.03 a share in the year-earlier quarter.

This year’s third quarter included a $525-million tax payment that IBM had to make as it repatriated $9 billion in profit earned overseas. Without that payment, IBM’s continuing operations showed income of $1.26 a share.

That easily surpassed the $1.13 a share that analysts surveyed by Thomson Financial had projected. But analysts had expected revenue of $21.7 billion, on average. Excluding PCs, sales rose just 4% over last year.

The results were an important benchmark in what has been an uneven year for IBM, which has yet to convince Wall Street that its strategy of selling a wide slate of “business performance transformation services” will dramatically transform the company’s results.

The Armonk, N.Y., company’s first-quarter results fell short of Wall Street’s forecasts, sending its stock down sharply and prompting the company to cut 14,500 jobs. Although earnings were stronger in the second quarter, lifting the stock, the share price still is down 16% this year, compared with a 1.8% decline for the blue-chip Standard & Poor’s 500 index.

But IBM rose to $84.50 in after-hours trading Monday, after the earnings report. The shares had gained 24 cents to $82.59 in regular trading.