SAN FRANCISCO - IBM, the world's largest technology services company, today reported a 47 per cent rise in quarterly profit after boosting software sales through acquisitions and improving services revenue, sending its shares up 5 per cent in after hours trading.
Net income in the third quarter rose to US$2.22 billion ($3.38 billion), or US$1.45 per share, from US$1.52 billion, or US94 cents per share, a year earlier, when IBM had a US$525 million tax charge for repatriating overseas earnings.
Revenue climbed to US$22.6 billion from US$21.5 billion. Revenue rose 3 per cent to US$12.0 billion in the quarter, and the company signed services contracts totaling US$10.5 billion.
After the earnings report, IBM shares rose 5.2 per cent to US$91.50 in extended trading from a close of US$86.95 on the New York Stock Exchange.
International Business Machines (IBM) in the third quarter announced more than US$3.6 billion of acquisitions in software companies as it expanded its most profitable business amid slowing growth in computer services, its largest unit.
Sales were also helped by demand for IBM mainframe computers used by corporations, governments and universities for complex computing tasks.
IBM shares gained 7 per cent in the third quarter, but the stock trades at just 13 times expected 2007 earnings per share, a 14 per cent discount to Hewlett-Packard Co, IBM's closest competitor, and a 15 per cent discount to the average price-to-earnings multiple of companies on the Standard & Poor's 500 Index.