IBM sees better profits for `09

IBM sharply raised its full-year earnings forecast as it benefits from focusing more on higher-margin businesses in software and services, sending its shares up as much as 3 per cent.

The outlook and stronger-than-expected quarterly earnings, coming on the heels of Intel's stellar results this week, may signal that the worst could be over for the hard-hit technology sector, some analysts say.

Others point out that IBM managed to boost profits mainly by cutting costs and decreasing its dependence on hardware -- an area that has bore the brunt of the worldwide downturn in technology spending.

International Business Machines Corp said it now expects 2009 earnings of at least $9.70 per share, up from its previous outlook of $9.20. The company said it was ahead of its plan of achieving $10 to $11 earnings per share in 2010.

"This, combined with Intel's results, is pushing me to be more optimistic," said Kim Caughey, senior analyst at Fort Pitt Capital Group. "Seeing they made it on the bottom line, and were pretty darned close on the top line, it gives me confidence looking at technology in general."

Leading chipmaker Intel unveiled stronger-than-expected earnings and outlook this week, bolstering hopes that the worst of the industry's downturn had passed.

Analysts said IBM's higher outlook took the disappointment out of its lower-than-expected quarterly revenue, which fell 13 per cent to $23.3 billion. The market's average forecast had been for $23.5 billion, according to Reuters Estimates.