Strong sales of high-margin software and services helped IBM on Thursday report fourth-quarter earnings that easily beat Wall Street expectations.
Big Blue reported fourth-quarter earnings of $2.26 per share, up 12 percent from $2.01 during the same period a year ago. That beat the consensus analyst estimate of $2.19 per share reported by Thomson Financial. Revenues rose 7 percent to $26.3 billion.
Those results came thanks to the long campaign at IBM to shift away from low-margin businesses such as personal computers toward higher-margin services and software.
IBM shares fell $0.13 to $99.45 in after-hours trading Thursday.
The stronger-than-expected results came thanks to a bump in business for IBM's biggest business, services, and a double-digit jump in software sales.
IBM Global Services sales rose 7 percent to $8.6 billion over the year earlier. IBM reported that it signed new services contracts worth $17.8 billion, up 55 percent year over year. Overall, IBM reported a services backlog of $116 billion, up $5 billion over the same period a year ago.
The computing giant has made a specialty out of selling the kind of boring, behind-the-scenes software that powers many big businesses—and the quarter's highlights include a 14 percent increase in software sales to 5.6 billion compared to the same period a year ago.
Sales of IBM's WebSphere software—used to bind disparate corporate system together—rose 22 percent. Sales of information management software sales rose 28 percent. Infrastructure software rose 25 percent. And sales of IBM's Lotus messaging software rose 30 percent.
As a result, the compan
