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Wednesday, 18 April, 2001, 21:46 GMT 22:46 UK
IBM profits up 15%
IBM Aptiva computer
IBM continues to buck the tech-sector trend
The world's biggest computer maker IBM has reported a 15% increase in profits for the first quarter of 2001.

IBM said it was not immune to cutbacks in consumer spending but it expected to continue outperforming its rivals.

The IBM results follow a string of gloomy first quarter figures from US technology companies.

Internet systems maker Cisco, chip maker Intel, Texas Instruments and consumer electronics giant Philips have all reported sharp drops in profit in the past few days, as they react to a slowdown in the US and world economy.

Apple results

By contrast, IBM reported net income of $1.75bn, or 98 cents per share, compared with $1.52bn, or 83 cents per share, for the same period last year.

Analysts had expected earnings in a range of 89 cents to $1.02, with the average at 98 cents.

Sales rose 9% to $21bn in the quarter.

Meanhwhile, computer giant Apple exceeded Wall Street's expectation by a considerable margin.

The company returned to profitability as it had promised after posting its first quarterly loss in three years.

It made a $43m profit for the three months to 31 March.

Fred Anderson, Apple's chief financial officer, said: "We're in a challenging economic environment, but given that, we feel good we've returned the company to sustainable profitability."

Mr Anderson cited sales of the new PowerBook laptop - 115,000 units were shipped in the quarter - as a huge boost to revenues.

It also introduced its new Mac OS X operating system, which will be bundled with new computers starting in July.

Apple shares surged 12% in after-hours trading, rising to $25.55, after finishing the regular session up $2.39 at $22.79.

IBM 'safe haven'

IBM's results will have more impact on market sentiment, however.

Many analysts view the company's performance as an indicator of what to expect for the rest of the year for the tech sector and the stock market at large.

Its stock has been seen as a safe haven for tech investors for its wide base of products that range from custom microchips to supercomputers.

The company has sidestepped the brunt of a tech downturn in part on the strength of an upgrade of its mainframe computers and expanding microelectronics business.

German downturn?

It was relatively bullish about its prospects on Wednesday.

"Looking forward, we are no better than others in predicting how the current economic uncertainty will unfold," Chairman and Chief Executive Louis Gerstner said in a statement.

"IBM is certainly to not immune to broad cutbacks in customer spending.

"However, based on recent results, we expect we will outperform most of our competitors in whatever market emerges this year."

The company said it saw no downturn in Eurpean sales, with the possible exception of Germany.

The IBM report came after the end of the regular trading session on the New York Stock Exchange, where IBM shares closed at $106.50, up $6.80, or 6.8%.

The stock has outperformed the benchmark Standard & Poor 500 index by about 30% this year.

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