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UPDATE (4:08 p.m.):Global technology and consulting giant IBM reported better-than-expected results this afternoon, earning operating net income of $3.3 billion or $2.78 per share during the first three months of 2012.
However revenue at the Armonk, N.Y. based company was flat at $24.67 billion and below estimates set by Wall Street.
“In the first quarter, we drove strong profit and earnings per share growth. We delivered another excellent software performance, expanded services margins, and continued the momentum in our growth initiatives,” IBM Chief Executive Ginni Rometty said. “Our investments in growth market countries continued to generate strong revenue growth across software, hardware and services while contributing to the company’s ongoing margin expansion.”
On the results, IBM has increased its full year guidance to $15.00 from $14.85 earlier.
Europe weighed on the company’s results, where sales declined two per cent before adjusting for currencies. Asia and the U.S. saw stronger results, with revenue up four and two per cent, respectively.
IBM said 40 markets tallied double digit sales gains and the growth markets of Brazil, Russia, India, and China saw a combined 10 per cent jump.
The companies hardware division, which fuelled its beat last quarter, reported tepid quarterly results. Within the unit, revenue fell seven per cent to $3.7 billion.
Software was a better category for the tech giant this period, increasing 5 per cent to $5.6 billion.
A key category Wall Street analysts were looking to, contract signings for future services, saw tepid demand, with the total backlog declining to $139 billion. Contract signings generally act as a gauge of corporate discretionary spending and helps foreshadow the investment magnitude companies are making.
Shares in IBM are two per cent lower in after-hours trading.
Global tech and consulting giant International Business Machines Corp. is set to release earnings results for the first three months of 2012 just minutes after markets in the U.S. close.
Analysts polled by Bloomberg expect the company to report earnings per share of $2.65 on revenue of $24.8 billion.
Investors will be looking for colour on two key areas from IBM: contract signings and hardware orders.
The first, contract signings, will shed some light on discretionary tech spending by corporates in the U.S. and abroad. A tick up would indicate that companies are once again investing.
Equally important to IBM is its hardware, which fuelled the earnings beat last quarter. Hardware unit revenue last surged 21 per cent.
“For IT Hardware, bright spots include solid expectations around storage and services spending and ongoing tablet momentum,” Darrin Peller of Barclays says. “Indications for corporate PC and server demand down-ticked from our last survey, however.”
Shares in IBM traded more than two per cent higher during the day.