IBM sees better-than-expected 2009 profit; Q4 earnings jump 12%

SAN FRANCISCO -- IBM is forecasting significantly higher profits for 2009 than Wall Street expected, a sign that the company's focus on high-margin services and software contracts is paying off even while overall sales are slumping.

The Armonk, N.Y.-based company predicted at least $9.20 a share in profit in 2009. Analysts surveyed by Thomson Reuters were expecting $8.75 a share.

The world's biggest manufacturer of mainframe computers and No. 2 software maker said Tuesday that net income rose 12% to $4.43 billion, or $3.28 a share, in the fourth quarter ended Dec. 31, from $3.95 billion, or $2.80 a share, a year earlier. That easily beat the average analyst forecast of $3.03.

Revenue fell 6.4% to $27.0 billion.

IBM shares rose $2.85 to $84.83 in extended trading. They had closed down 3.5% on the New York Stock Exchange.

Contributing: Reuters