AP
IBM preannounces 3Q results; beats estimates
Wednesday October 8, 7:41 pm ET
By Jordan Robertson, AP Technology Writer
IBM announces 3Q results early, profit beats Wall Street estimates


SAN FRANCISCO (AP) -- IBM Corp. released third-quarter results ahead of schedule Wednesday that beat Wall Street's estimates, sending the company's stock, a component of the Dow Jones industrial average, up 6 percent in after-hours trading.

The Armonk, N.Y.-based company also reaffirmed its full-year earnings guidance, a strong sign that IBM's core businesses are holding up well despite the deteriorating U.S. economy.

IBM's shares have tumbled 31 percent since July on concerns that IBM's exposure to the crippled financial services industry, which accounts for 30 percent of the company's sales, would hurt results.

The stock had been performing well for most of the year despite the ailing U.S. economy, rising 25 percent and hitting a 52-week high of $130.93 on July 24 before the shares started sliding.

IBM said after the market closed Wednesday that it earned $2.05 per share in the July-September period, four pennies higher than the average estimate of analysts polled by Thomson Reuters. Net income for the period was $2.8 billion, an increase of 20 percent over the same period last year.

Sales increased 5 percent to $25.3 billion but fell short of Wall Street's expectations. Excluding the effects of currency fluctuations, IBM's sales increased 2 percent.

Analysts were expecting sales of $26.5 billion, but analysts had started lowering their estimates ahead of the unexpected announcement Wednesday. They cited the deteriorating economy and a strengthening U.S. dollar as reasons for cutting their forecasts.

A strengthening dollar makes deals done in other currencies worth less when IBM accounts for the sales, which is done in dollars.

IBM maintained its forecast of at least $8.75 per share in profit in 2008, a 22 percent improvement over last year.

IBM shares gained $5.11, or 5.6 percent, to $95.66 in after-hours trading, having closed down $5.10, 5.3 percent, at $90.55 during the regular trading session.