IBM reports 10% jump in profit for Q4

IBM on Tuesday reported a 10% jump in profit for the fourth quarter as revenue increased at the company for the first time in more than a year.

IBM reported a profit of $3.59 per share, up from $3.27 in the same quarter last year and ahead of the $3.47 that financial analysts had been expecting, according to Thomson Reuters.

Revenue for the quarter was $27.2 billion, up 1% from the same period last year. Analysts had been expecting revenue to be essentially flat with the year earlier. It was the first year-over-year revenue growth IBM has reported since the third quarter of 2008. Quarterly net income was $4.8 billion, up 9% from the same quarter last year.

“We are confident about 2010 and our ability to achieve the high end of our long-term roadmap,” Chairman and CEO Sam Palmisano said in a statement.

A 3% drop in sales from the Americas was offset by a 2% increase in Europe, the Middle East and Africa, and a 6% increase in Asia. IBM's results benefitted from currency fluctuations. At constant currency, IBM's overall revenue would have declined 5%, the company said.

Revenue from IBM Global Services was up 2%, and software revenue increased by the same amount. WebSphere sales were up 13% year over year, IBM said.

Sales from its Systems and Technology segment, which includes IBM's servers, continued to decline, but by less than in recent quarters. Overall revenue for the segment was down 4% to $5.2 billion. System p and System z products saw revenue decline by 14% and 27%, respectively, while sales of System x servers increased 37%, IBM said.

The results are the latest sign that IT spending is gradually recovering. Last week Intel reported a fourth-quarter profit of $2.28 billion, or 40 cents, an improvement from a year earlier despite including a $1.25 billion legal settlement with Advanced Micro Devices. Intel's revenue was up 28%, though largely on consumer sales.

Also last week Forrester Research said the U.S. IT market will grow by 6.6% this year and declared the tech downturn of 2008 and 2009 to be “unofficially over.” As evidence it cited a 4% increase in fourth-quarter revenue reported by Oracle, and the “cautious optimism” for 2010 expressed by Accenture.