International Business Machines Corp. (NYSE:IBM), the world’s largest provider of information technology products and services, raised its expectations for the full year 2012, after reporting a 6 percent increase in earnings during the second quarter.
The company gained $3.9 billion or $3.34 per share during the past three months ending in June. The result is higher than its $3.7 billion, or $3 per share earnings, during the same period in 2011. Its total revenue was down by 3 percent to $25.8 billion. The company cited the currency adjustment as the main reason that brought $1 billion worth of negative impact to its revenue growth.
In a press statement, Ginni Rometty, International Business Machines Corp. president and chief executive officer said, IBM delivered a strong profit, earnings per share, and free cash flow growth during the second quarter. She said, “This performance reflects continued strength in our growth initiatives, and investments in higher value opportunities. These are fundamental elements of our long-term business model.”
Citing the company’s strong performance, Rommety is confident in IBM’s capability in delivering greater value for its broad range of clients and shareholders. According to her, IBM is raising its full-year operating earnings expectations to at least $15.10 per share. IBM’s previous expectation for 2012 was $15 per share.
Based on the company’s earnings report, IBM revenues were down by one percent to $11.1 billion in the Americas, 9 percent to $7.9 billion in Europe, the Middle East, and Africa. Its revenue increased by 2 percent to $6.3 billion in the Asia Pacific region. Its revenue growth within the BRIC countries- Brazil, Russia, India and China is 5 percent.
The company managed to maintain positive earnings, despite the slowdown of the global economic growth and financial instability in the European region, by concentrating on higher margin services and software. The company cited that it should have earned $3.51 per share without the accounting charges for its previous acquisitions and company pension.
According to analysts, IBM’s $136 billion contract backlog is expected to be converted to revenue during the next quarters. IBM has guaranteed contacts with its clients.
During the extended trading on Wednesday (4:01 PM ET), the company’s stock value was up by 2.82 percent to $193.55 per share.
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