JAN 19 - IBM Corp
International Business Machines, which has been shifting its focus from hardware to higher-margin services and software over the past decade, said its strong services signings and backlog put it in a solid position as it starts the year.
When you look at the overall pipeline going into 1Q for software and services ... I think they look pretty good, Mark Loughridge said on a call with analysts on Thursday.
IBM plans to increase full year earnings per share, excluding items, by 10.5 percent 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.
Founded in 1911, IBM, a tech bellwether because of its global reach and scale, brought in revenue of $29.5 billion (19 billion pounds), 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 compared with expectations of $20.1 billion.
Investors view signings as a key indicator of future profits, but IBM says the focus should be more on the total business backlog because it is a better sign of revenue to come.
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.
We are well on track toward our long-term roadmap for operating earnings per share of at least $20 in 2015.
Rival companies in the tech sector have sent mixed messages about global IT spending amid worries the economic malaise, especially in Europe, would crimp technology budgets.
Software maker Oracle Corp
But Oracle rival SAP AG
Asked if, like Oracle, IBM was seeing longer approval times for tech spending by companies, Loughridge said: As far as lengthening of the sales cycles, more approvals, I do think people and CFOs are cautious about their business and they want to make sure they have the right processes engaged and we did see that.
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, 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 shares were up 2.6 percent at $185.24 in extended trading after closing at $180.52 on Thursday.
(Additional reporting by Jim Finkle in Boston; editing by Andre Grenon)