International Business Machines Corp (IBM) sharply raised its full-year earnings forecast as it benefits from focusing more on higher-margin businesses in software and services, sending its shares up as much as 3 percent.
The outlook and stronger-than-expected quarterly earnings, coming on the heels of Intel’s stellar results this week, may signal that the worst could be over for the hard-hit technology sector, some analysts say.
Others point out that IBM managed to boost profits mainly by cutting costs and decreasing its dependence on hardware — an area that has bore the brunt of the worldwide downturn in technology spending.
IBM said it now expects earnings of at least US$9.70 per share this year, up from its previous outlook of US$9.20.
The company said it was ahead of its plan of achieving US$10 to US$11 earnings per share next year.
“This, combined with Intel’s results, is pushing me to be more optimistic,” said Kim Caughey, senior analyst at Fort Pitt Capital Group. “Seeing they made it on the bottom line, and were pretty darned close on the top line, it gives me confidence looking at technology in general.”
Leading chipmaker Intel unveiled stronger-than-expected earnings and an improved outlook this week, bolstering hopes that the worst of the industry’s downturn had passed.
Analysts said IBM’s higher outlook took the disappointment out of its lower-than-expected quarterly revenue, which fell 13 percent to US$23.3 billion. The market’s average forecast had been for US$23.5 billion, according to Reuters Estimates.
Net profit for the quarter rose to US$3.1 billion from US$2.8 billion in the year-ago quarter. Profit per share rose to US$2.32 from US$1.97, much higher than the average Wall Street forecast of US$2.01 per share, according to Reuters Estimates.
“In an unpleasant economic and financial world, these are incredible results,” said Mike Holland, chairman of investment firm Holland & Co.
But some analysts say IBM’s strong outlook may not necessarily signal improvement for the overall sector, since the stronger profit was largely a result of higher margins rather than sales.
Gross profit margin rose to 45.5 percent from 43.2 percent a year earlier and chief financial officer Mark Loughridge said there was room for further improvement.
Loughridge said economic conditions remained tough and avoided declaring that the worst was over, although he forecast a boost from US government stimulus plans to encourage discretionary spending and a weakening dollar.
IBM shares briefly rose around 3 percent in extended trade after closing up US$3.42, or 3.2 percent, at US$110.64 on the New York Stock Exchange. They later settled to around US$112.40, up 1.6 percent.
Super Typhoon Kong-rey is the largest cyclone to impact Taiwan in 27 years, the Central Weather Administration (CWA) said today. Kong-rey’s radius of maximum wind (RMW) — the distance between the center of a cyclone and its band of strongest winds — has expanded to 320km, CWA forecaster Chang Chun-yao (張竣堯) said. The last time a typhoon of comparable strength with an RMW larger than 300km made landfall in Taiwan was Typhoon Herb in 1996, he said. Herb made landfall between Keelung and Suao (蘇澳) in Yilan County with an RMW of 350km, Chang said. The weather station in Alishan (阿里山) recorded 1.09m of
NO WORK, CLASS: President William Lai urged people in the eastern, southern and northern parts of the country to be on alert, with Typhoon Kong-rey approaching Typhoon Kong-rey is expected to make landfall on Taiwan’s east coast today, with work and classes canceled nationwide. Packing gusts of nearly 300kph, the storm yesterday intensified into a typhoon and was expected to gain even more strength before hitting Taitung County, the US Navy’s Joint Typhoon Warning Center said. The storm is forecast to cross Taiwan’s south, enter the Taiwan Strait and head toward China, the Central Weather Administration (CWA) said. The CWA labeled the storm a “strong typhoon,” the most powerful on its scale. Up to 1.2m of rainfall was expected in mountainous areas of eastern Taiwan and destructive winds are likely
The Central Weather Administration (CWA) yesterday at 5:30pm issued a sea warning for Typhoon Kong-rey as the storm drew closer to the east coast. As of 8pm yesterday, the storm was 670km southeast of Oluanpi (鵝鑾鼻) and traveling northwest at 12kph to 16kph. It was packing maximum sustained winds of 162kph and gusts of up to 198kph, the CWA said. A land warning might be issued this morning for the storm, which is expected to have the strongest impact on Taiwan from tonight to early Friday morning, the agency said. Orchid Island (Lanyu, 蘭嶼) and Green Island (綠島) canceled classes and work
KONG-REY: A woman was killed in a vehicle hit by a tree, while 205 people were injured as the storm moved across the nation and entered the Taiwan Strait Typhoon Kong-rey slammed into Taiwan yesterday as one of the biggest storms to hit the nation in decades, whipping up 10m waves, triggering floods and claiming at least one life. Kong-rey made landfall in Taitung County’s Chenggong Township (成功) at 1:40pm, the Central Weather Administration (CWA) said. The typhoon — the first in Taiwan’s history to make landfall after mid-October — was moving north-northwest at 21kph when it hit land, CWA data showed. The fast-moving storm was packing maximum sustained winds of 184kph, with gusts of up to 227kph, CWA data showed. It was the same strength as Typhoon Gaemi, which was the most
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