IBM Q2 Profits Soar

The company's results were sure to be closely scrutinized by investors eager for signs of a broad recovery in the high-tech sector, which saw an upbeat report the previous day from chip-making giant Intel.

From April through June, IBM had net earnings of $1.7 billion, or 97 cents per share, up from $56 million, or 3 cents per share, in the comparable period last year. Last year's figures were dragged down by $1.4 billion in one-time charges.

Revenue rose 10 percent to $21.6 billion , though without currency fluctuations the increase would have been 3 percent.

Taking discontinued operations out of the mix, IBM said it would have earned 98 cents per share, matching the forecast of analysts surveyed by Thomson First Call. IBM beat the analysts' revenue estimate of $21.4 billion.

"Once again, IBM delivered a solid quarter despite the challenging economic environment," said Samuel J. Palmisano, IBM's chairman and chief executive.

"While it is difficult to predict the certainty of an economic rebound, IBM is in the best position to benefit further from any upturn in the market or the economy overall," he added.

Big Blue said its services sales jumped 23 percent from the same period in 2002, helped by the acquisition of the PricewaterhouseCoopers consulting firm. Software sales rose 6 percent.

Those successes helped overcome a 0.9 percent drop in hardware sales and an 18.4 percent plunge in financing revenue.

The earnings report came out after shares of Armonk, N.Y.-based IBM rose 30 cents to close at $86.74 on the New York Stock Exchange. The stock gained 1 cent in the extended session.

IBM's release offered no update on the company's announcement last month that the Securities and Exchange Commission is investigating how Big Blue booked revenue for its retail store solutions unit in 2000 and 2001.

For the first half of 2003, IBM posted profits of $3.1 billion, or $1.75 per share, on revenue of $41.7 billion. Those figures all rose from the first half of 2002, when IBM earned $1.2 billion, or 71 cents per share, on revenue of $37.7 billion.