I.B.M reported an earnings performance and revenue that exceeded Wall Street’s estimates, reporting solid profit on flat revenue for the last quarter of 2012. I.B.M.’s net income increased by 6% in the fourth quarter, to $5.8 billion. The company’s operating earnings per share rose 14% to $5.39, which was higher than analysts’ average estimate of $5.25 a share.
Revenue was $29.3 billion, beating an analysts’ forecast of $29.1 billion. I.B.M. reported revenue of $29.5 billion a year earlier, but those results included $239 million in revenue from the sale of the company’s computerized cash register business to Toshiba TEC. Mark Loughridge, I.B.M.’s chief financial officer, said in a conference call that the quarter was “very, very strong” and that the company finished a year of record profit, earnings per share, and cash flow.
I.B.M. is currently the largest supplier of information technology to corporations and government agencies worldwide. The company sells hardware, software, and service contracts to its customers. I.B.M. has moved aggressively into fast-growing markets abroad. The company is also focusing on higher-margin products and services.
Profit rose in the services divisions but revenue in the big technology services business dropped 2% to $15 billion. I.B.M.’s services are designed to help companies analyze vast amounts of data, increase sales, and find opportunities to cut costs. I.B.M.’s data analytics unit grew 13% in the quarter. The company’s services are also sold to governments to reduce energy consumption, manage traffic, and curb crime. The company’s Smarter Planet group grew more than 25% over the same period last year.
The company’s results are closely watched because they are believed to indicate a direction for trends in the market of business technology spending. There was a fear that Europe’s continuing troubles, slower growth in China, and anxiety about the fiscal issues facing the United States might have reduced corporate investment in technology in the fourth quarter. A. M. Sacconaghi, an analyst at Sanford C. Bernstein, said, “For the most part, I.B.M.’s performance was pretty good. Relative to the worry that was out there, investors feel good about it.” I.B.M. has a history of strong earnings gains with scant revenue growth.