IBM sails past analysts' forecasts in Q2

BIG BLUE released its second quarter financial results Thursday, blowing past Wall Street analysts' estimates by showing strong profits, fueled by a double-digit increase in quarterly revenues over last year's second quarter.

IBM reported that its second quarter revenues increased 13 per cent year over year to $26.8 billion, about $900 million over analysts' expectations. Its strong revenue growth was more than doubled by the higher value of foreign currencies relative to the weakened US dollar, due to the volume of IBM's overseas sales.

The company said that its net income in the second quarter was $2.77 billion or $1.98 per share, 16 cents more than stock analysts' average forecast. That was a nearly 28 per cent increase in earnings per share over the same period last year.

In the second quarter, its technology services grew 15 per cent to $10.1 billion over last year and its consulting services expanded almost 18 per cent to $5.11 billion.

Strong performance in services and software, which also grew 17 per cent in the quarter, overshadowed lacklustre growth in IBM's hardware sales, which rose just five per cent. IBM's hardware sales growth would have been flat, were it not for the currency arbitrage benefit of the weak dollar.

IBM also raised its full year earnings forecast for 2008 to at least $8.75 profit per share.

The company's share price rose slightly during normal trading hours on Thursday, but it settled back during after hours trading, down 40 cents to $126.12. µ