Page last updated at 07:37 GMT, Wednesday, 21 January 2009

IBM bucks gloom with rosy outlook

IBM sign
Many investors see IBM shares as a safe haven from the US downturn

IBM's latest quarterly profits rose 12% and the technology services firm issued a rosy forecast for 2009 - a rare ray of light for the gloomy tech sector.

IBM believes it can benefit as cash-strapped companies seek its help to cut costs and improve IT infrastructure.

The firm has also been able to cut its own costs sharply.

IBM's net profit in the fourth quarter rose 12% from a year earlier to $4.4bn. IBM boss Samuel Palmisano said it had been an "outstanding year".

IBM said it expected to earn $9.20 per share in 2009 - significantly more than analysts had expected.

"To be honest, I didn't believe they could show something like this - I think the results they posted were stellar," said Peter Misek, an analyst with Canaccord Adams.

"They just executed really well - really, really, really well."

IBM's profit margin was 47.9%, up three percentage points from a year earlier.

The news boosted IBM's share price. In after-hours trading in New York, it climbed 4.5% to $85.64.

Other technology firms have fared less well.

Intel reported a sharp 90% profit drop in the final quarter of 2008, while Bloomberg said it could report its first loss for more than two decades in the current quarter.

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