IBM raises forecast after 7pc lift in profit

IBM, the world's biggest computer-services provider, raised its full-year earnings forecast after posting a 7.1 per cent increase in first-quarter profit, helped by software margins.

Operating earnings increases to at the least US$15 ($18.25) a share this year, IBM said yesterday, boosting its January forecast of in any case US$14.85.

Analysts predicted US$14.92, the typical of estimates compiled by Bloomberg.

The corporate also reported revenue for last quarter that fell in need of projections.

IBM is making progress with a plan to make software, that's more profitable than hardware, account for 1/2 earnings as businesses and Governments boost spending on programmes that analyse data and project trends.

Consulting was hurt by Japan's recovery from last year's earthquake and tsunami, in addition to constrained government budgets world wide, chief financial officer Mark Loughridge said yesterday.

"The key markets continued to be weighed down by Japan and by the general public sector, which declined more sharply this quarter" with regards to business services demand, Loughridge said on a conference call.

"The expansion markets continued to accomplish well, with double-digit growth again this quarter."

Loughridge reiterated that he expects the company's performance to enhance inside the second half.

"The tip line and sure the base line have to be stronger inside the second half," said Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co.

"The comparisons get a whole lot easier and they're going to have some benefits from the fee cutting," said Sacconaghi, who has a market perform rating at the stock.

Sales increased 0.3 per cent to US$24.7 billion, compared with the US$24.8 billion analysts predicted.

Net income advanced to US$3.07 billion, or US$2.61 a share, from US$2.86 billion, or US$2.31, a year earlier.

Earnings excluding some items rose to US$2.78 a share from US$2.41.

Analysts predicted US$2.65.

Revenue from Europe, Middle East and Africa declined 2 per cent to US$7.6 billion, while sales within the Americas and Asia-Pacific region increased.

The effect on IBM's revenue growth from Europe's debt crisis might worry some investors, said Joseph Foresi, an analyst at Janney Montgomery Scott in Boston, who has a buy rating at the company.

- Bloomberg