IBM sees 10 p.c. EPS growth in 2012 after solid Q4

CALIFORNIA, USA: IBM Corp, the world's largest technology services company, aims to grow earnings by 10 per cent this year after it beat fourth quarter profit estimates, underderscoring signs of confidence in global tech spending.

"We had a strong fourth-quarter performance, capping a year of record earnings per share, revenue, profit and free cash flow," Ginni Rometty, who took over as chief executive on January 1, said in a statement on Thursday.

"We are well on track toward our long-term roadmap for operating earnings per share of at least $20 in 2015."

This year, IBM plans to increase full year earnings per share, excluding items, by 10.5 per cent to at least $14.85 after reporting fourth-quarter profit, excluding items, was $4.71 per share above average expectations of $4.62 according to Thomson Reuters I/B/E/S.

International Business Machines, a tech bellwether because of its global reach and scale, brought in revenue of $29.5 billion, up from $29.0 billion in the same period last year and just below average estimates of $29.7 billion.

It said its services backlog was $141 billion, up $5 billion adjusting for currency, while signings of services contracts in the fourth quarter were $20.4 billion versus expectations of $20.1 billion.

Investors view signings as a key indicator of future profits. But IBM says the focus should be more on total backlog of business because it is a better sign of revenue to come.

Globally, IBM reported a 3 percent revenue gain in the Americas and 1 percent in Europe, Middle East and Africa in the fourth quarter. Revenue in the Asia-Pacific region fell 1 percent adjusted for currency effects, while revenue in the BRIC countries was up 8 percent.

Kim Forrest, senior analyst for Fort Pitt Capital Group said: "They are bullish for the next quarter, so I am pretty happy as a holder of IBM." She added she was "unbelievably encouraged by their margins."

IBM share were up 2.7 per cent at $185.50 in extended trade after closing at $180.52 on Thursday.