Quarterly profit at International Business Machines Corp. leaped 26 percent and blew past analysts' forecasts yesterday, with U.S. operations showing surprising strength given the faltering economy. IBM also increased its earnings forecast for the year.
Another tech leader, online auction company eBay Inc., also beat Wall Street's expectations yesterday with a 22 percent rise in first-quarter profit and raised its outlook for the rest of the year.
In the first quarter, IBM earned $2.32 billion, or $1.65 a share, well ahead of its profit of $1.84 billion, or $1.21 a share, in the same period a year earlier.
Revenue rose 11 percent to $24.5 billion, better than the $23.7 billion expected by analysts surveyed by Thomson Financial. The average earnings forecast had been $1.45 a share.
IBM's sales numbers were boosted by weakness in the dollar, because deals in other currencies now translate into more greenbacks.
IBM now expects to earn at least $8.50 a share in 2008. Analysts had been expecting $8.25 a share.
IBM shares rose $3.30, 2.82 percent, to close at $120.47 before yesterday's earnings report. The stock went as high as $124 in extended trading.
Also benefiting from a weak dollar, eBay reported a 22 percent rise in first-quarter profit.
It reported net income of $460 million, or 34 cents a share, on revenue of $2.19 billion in the quarter that ended March 31. In the year-earlier quarter, eBay earned $377 million, or 27 cents a share, on revenue of $1.77 billion.
Excluding onetime items, eBay's net income was $562 million, or 42 cents a share, compared with $460 million, or 33 cents a share, in the first quarter of last year. On that basis, analysts polled by Thomson Financial expected, on average, earnings of 39 cents a share on revenue of $2.08 billion.
EBay raised its outlook for 2008, saying it now expects revenue between $8.7 billion and $9 billion with earnings per share from $1.35 to $1.40. Excluding special items, it said it expected earnings per share between $1.70 and $1.75.