The corporate technology supplier reports The New York Times also raised its forecast for operating profit for the year, to “at least $13.15” a share. The earlier guidance was for “at least $13” a share.
Samuel J. Palmisano, IBM’s redoubable CEO (right) said the company saw “excellent momentum” in areas it had pegged for higher growth, including business intelligence software and emerging markets abroad and surpassed the average £2.30 share estimate by analysts.
The company reported revenues of $24.6bn, an increase of 5%, after currency gains adjustment. Sales were above Wall Street’s average estimate of $24bn. In the prior year 1Q, IBM revenues were $22.9bn. Big computer sales were up 41 % from the previous year, but analysts, who love the gloomy side of life. see concern in soft services signings.
For more than a decade, IBM has been able to deliver gains in earnings per share of more than 10%, while revenue has increased about 3% a year, achieving this achieved by cost cutting and share buy-backs and a strategy of moving into higher-margin businesses and new markets.
These include applying research and computing to help governments tackle challenges like traffic management, water conservation and energy use as in a recent deal with the California Department of Transportation to build systems for predicting and managing traffic.
IBM current five year plan running to 2015, singles out as two high growth niche markets, cloud computing which it forecasts as bringing in $7 bn by 2015 and data mining (where it has spent $14bn to acquiring 25 specialist analytic companies now employing 8,000 consultants and 200 mathematicians.)
Software mining, more correctly termed 'business intelligence' or 'analytics software' grew 20% in the quarter. The 2015 goal for that business for IBM is more that double that of the cloud, at $16bn.