IBM raises ’07 forecast as revenue, profit climb

IBM Corp., the world’s largest technology services company, Wednesday posted a 12% jump in second-quarter profit and raised its 2007 earnings forecast as revenue surged on software company acquisitions.

IBM shares, which earlier this week hit a five-year high, rose 3.1% to $114.17 in after-hours trading following the earnings report. They gained 31 cents to $111.08 in regular trading.

Citing the strong results, IBM increased its forecast for earnings-per-share growth in 2007 to 14% to 15% from a previous forecast of 13% to 14%.

Second-quarter net income rose to $2.26 billion, or $1.55 a share, from $2.02 billion, or $1.30, a year earlier. Revenue rose 9% to $23.8 billion.

U.S. revenue grew 6% to $10.1 billion, reversing a slowdown in the first quarter, Chief Financial Officer Mark Loughridge said during a conference call with analysts.

The company’s revenue in Europe, the Middle East and Africa rose 13%, while Asia-Pacific revenue climbed 10%.

“It looks like a good report all around,” said Kim Caughey, vice president and senior analyst at Fort Pitt Capital Group Inc. “It doesn’t look like there are any holes at this point.”

Analysts, on average, had forecast earnings per share of $1.47 before certain items and revenue of $23.1 billion, according to Reuters Estimates.

Armonk, N.Y.-based IBM has made more than $5 billion of acquisitions of software makers in the last year to boost sales in its most profitable business, while improving profitability in technology services, its largest business. About half the software unit’s second-quarter revenue growth came from recent acquisitions, IBM said.