IBM has reported third-quarter revenues of $24.3bn, up 3% compared with a year ago, but shares dropped 3.7% on news of fewer services deals and outsourcing contracts.
By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.
Net quarterly profit rose to $3.6bn, or $2.82 a share, compared with $3.2bn, or $2.40 a share, a year ago, ahead of analyst expectations of earnings per share of $2.75.
IBM also raised its full-year earnings outlook to "at least $11.40 per share" for the full year, up from its previous forecast of "at least $11.25".
Despite these increases, investors interpreted a decline in services and outsourcing contracts as sign of limited future revenue growth, according to US reports.
IBM's services contract signings fell 7% to $11bn and outsourcing signings fell 15% to less than $6bn.
But analysts noted the firm won a major services deal with ABN Amro shortly after the quarter closed, and said IBM was still a solid investment in the long term.
IBM attributed the acceleration of its revenue growth to a strong expansion in a broad group of emerging market countries, and a rebound in its hardware division as it launched new mainframe computers.
The company reported a 15% rise in sales of its System-Z mainframe computers, which contributed a 3% rise in overall revenue.
"We achieved excellent performance in our growth markets unit, reflecting sustained investments through the downturn and the continued strength of the infrastructure build-out in these countries," said Sam Palmisano, IBM chairman, president and chief executive.
IBM was positioned in some of the fastest-growing markets in the IT business. The company now expected to report earnings per share for 2010 of at least $11.40, up from the $11.25 it forecast three months ago, he said.