IBM, the world's largest computer company with a major facility near Warwick, has posted a dip in quarterly net profit, but results topped Wall Street expectations as revenue from consulting grew for a second straight quarter.
Chief Financial Officer Mark Loughridge told investors he expects the company to deliver double-digit earnings per share growth during the fourth quarter and into next year.
"Overall it was a solid quarter," said Ed Crotty, managing director at Spectrum Advisory Services in Atlanta, Georgia, which owns IBM shares. "What they demonstrated is some of the benefits they promised with the restructuring efforts."
IBM is cutting more than 13,000 jobs, or four per cent of its workforce, with layoffs hitting hardest in Europe.
Consulting, the company's biggest revenue generator, slipped earlier this year, but has been rebounding after IBM won a 1.5 billion euros contract with ABN Amro Holding NV of the Netherlands.
"We do have some strong tail winds," Mr Loughridge told an analyst who asked whether investors should expect per-share profit of $2.00 in the fourth quarter.
"We also have some head winds," he added, including a strengthening dollar, which hurts revenue and earnings.
Third-quarter net income dipped 2.5 per cent to $1.52 billion from a restated $1.55 billion in the yearearlier period, IBM said in a statement.
Earnings were held back by a $525 million tax charge for repatriating cash earned overseas.
"I would encourage you to roll through the over-achievement from the third (quarter) to your full year" estimates, Mr Loughridge told analysts.
"I suspect what that means is that we should add 13 cents for the full year to our estimates," analyst Peter Misek of Canaccord Capital in Toronto said of Loughridge's forecast.
Third-quarter revenue at IBM fell
7.8 per cent to $21.5 billion from $23.4 billion a year earlier, reflecting the sale of its PC business to China's Lenovo Group Ltd. in May.
Revenue at IBM's Global Services business, which provides computer consulting and outsourcing to companies, rose three per cent to $11.7 billion from $11.3 billion a year
earlier. It signed $11 billion of new consulting contracts.
Computer hardware revenue, which includes sales of IBM's latestgeneration z9 mainframe computers that started shipping in mid-September rose seven per cent to $5.1 billion.
Software, a key profit driver, rose five per cent to $3.8 billion, with a strong performance from its Web-Sphere group of "middleware" products that help different software programs work together in corporate data centres.