42) IBM Net Income Rises 12% as Revenue Surges on Software

IBM, the biggest technology services corporation in the world, on Wednesday disclosed an increase of 12% in quarterly income and increased its 2007 revenue prediction because earnings grew on software-corporation acquisitions.

IBM shares jumped 3.3% to $114.72 in after-hours trade, which overpass experts’ predictions. The shares had increased 14% this year. As a result, IBM raised its prediction for the increase of earning for each share in 2007 to 14% to 15% from a former prediction of 13% to 14%.

The acquisitions are only part of the strategy by IBM to fuel the software business's share of overall margin to 50% by 2010 from 40% last year. Around half of the software sector’s second-quarter revenue increase of 13%, to $4.8 billion, was owe to the latest acquisitions, IBM said.
The net margin in the second quarter reached $2.26 billion, up 1.04%. Revenue jumped to $23.8 billion, up 0.08%. U.S. revenue only rose 6% to $10.1 billion. Asia-Pacific revenue grew 10% with the revenue in Europe, the Middle East and Africa up13%. The market of IBM's printer division also contributes partly to the net profit in the second quarter.

Its gross income rose to 41.8% in the second quarter. Revenue in IBM's international technology services business grew 10.1% to $8.76 billion. The revenue of international business services rose 10% to $4.34 billion. IBM signed services agreements up to $11.7 billion, in comparison with $11.1 billion in the first quarter. IBM said on Monday it signed an outsourcing contract worth $1.4 billion with AstraZeneca Plc.

"Our objective is for full-year signings increase," said CFO Loughridge.