IBM's shines with fourth quarter, 2013 outlook

Tue Jan 22, 2013 10:51pm EST
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By Nicola Leske

(Reuters) - IBM, the world's largest technology services company, gave a better than expected 2013 outlook after a solid fourth quarter that analysts say has more to do with Big Blue's smooth execution than a vibrant tech spending environment.

Companies had been widely expected to hold back on IT purchases in December in part because of worries about the so-called U.S. fiscal cliff. Automatic tax increases and spending cuts would have been triggered had Congress not made a deal to avert the cliff and could have pushed the weak U.S. economy into recession.

But International Business Machines Corp said on Tuesday that its quarterly results beat forecasts and it plans to achieve earnings of at least $16.70 a share for the full year, above analysts' consensus forecast of $16.57.

While some analysts said IBM's earnings may be a sign of an improved tech spending environment, others said the strong results were specific to IBM's business model.

"IBM is better positioned in a tough environment than most tech companies are," said Cindy Shaw, managing director at Discern.

IBM made a bold strategic move a decade ago when it bought PriceWaterhouse's consulting business and then decided to exit the PC business, betting its future was in finding solutions to business problems with the help of software and technology.

That strategy appears to have paid off.

"What IBM does better than anyone, with the exception of Accenture, is solving problems and I am not talking about taking out some costs, but really driving revenue," Shaw said.   Continued...

A worker is pictured behind a logo at the IBM stand on the CeBIT computer fair in Hanover February 26, 2011. REUTERS/Tobias Schwarz