IBM EARNINGS EXCEED FORECASTS.Byline: Lawrence M. Fisher The New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Times
In another sign of continued health for high-technology makers, IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) reported first-quarter earnings Wednesday that were well in excess of analysts' estimates. IBM said its results were led by strong sales of services and software, which accounted for 60 percent of gross profit.
Shares of IBM, which reported its results after the end of regular trading, closed at $171.875, up $2.125, on the New York Stock Exchange New York Stock Exchange (NYSE)
World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . But IBM soared in after-hours dealings, gaining more than $17 to trade at $189.375.
Analysts said that IBM's results, coupled with the Microsoft Corp.'s strong performance on Tuesday, should counter the gloomy outlook painted for technology makers this quarter after Compaq Computer Corp. predicted, and delivered, half the earnings forecast and the Intel Corp. reported sales growth that was less than expected.
``This is just what the tech doctor ordered,'' said John B. Jones Jr., an analyst with Solomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. . IBM's service business, intellectual property and distribution put it in a different class than Compaq, he said.
``Compaq has many of the same pieces, but not the same quality,'' Jones said. ``Compaq addresses the world from a PC-centric standpoint. IBM addresses it from a customer-service standpoint.''
Though some analysts said IBM's better-than-expected results reflected the company's ability to manage expectations, they also pointed to a growing division between leaders and laggards in the technology industries. IBM has been able to position traditional strengths in data base management software and large servers as essential tools for electronic commerce.
For the quarter, IBM reported earnings of $1.47 billion, or $1.55 a diluted di·lute
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.
2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, up 41 percent from $1.04 billion, or $1.06 a share, in the comparable period a year earlier. Revenue rose 17 percent, to $8.58 billion, from $7.32 billion in the first quarter of 1998.
Per-share figures reflect a decrease in the average number of shares outstanding, to 911.9 million compared with 950.2 million in the first quarter of 1998. IBM spent approximately $2.1 billion on share repurchases Share Repurchase
A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. in the first quarter, up from $1.6 billion in the final quarter of 1998.
Analysts expected IBM to earn $1.41 a share, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. First Call, which tracks such estimates.