IBM ups annual revenue forecast, shares still fall

Big Blue reports 12% earnings gain for third quarter; hardware sales strong

A 10 percent increase in hardware sales helped IBM barely beat analyst estimates for third-quarter revenue.

The near-miss cost IBM in after-market trading, however, as shares (NYSE: IBM) fell nearly 4 percent to 137.30 from Monday's closing price of 142.83.

Big Blue reported third-quarter net income of $3.6 billion, or $2.82 per share, up from last year's Q3 numbers of $3.2 billion and $2.40 per share. Revenue was $24.3 billion, up 3 percent from a year ago.

Consensus estimates called for earnings of $2.76 per share and revenue of $24.2 billion.

In a conference call following the earnings release, IBM chief financial officer said, "All categories positively contributed to our revenue growth."

And indeed, Big Blue can point to several strong revenue streams:

* Hardware sales in Q3 were $4.3 billion, a gain of 10 percent from a year ago

* Software, $5.2 billion in revenue (only 1 percent above last year

* Global technology services, $9.5 billion (up 1 percent)

* Global business services, $4.6 billion (5 percent gain)

* Outsourcing signings, $5.7 billion (down 15 percent)

IBM upped its profit forecast for the fiscal year to "at least" $11.40 per share. Consensus estimates have called for annual profit of $11.30 per share.

Shares of IBM are up 9 percent this year through Monday's close. Since Aug. 26 the stock has climbed 16.3 percent.

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