IBM cites strong earnings for quarter

— -- IBM ibm surprised Wall Street on Monday by announcing strong fourth-quarter earnings four days ahead of schedule — a sign that the economy may not be as weak as feared.

IBM reported revenue of $28.9 billion, topping Wall Street estimates of $27.8 billion. Big Blue was the first major tech company to release earnings for the quarter.

The revenue increase was a jump of 10% from a year ago, although IBM said currency fluctuations accounted for about 6 percentage points of the gain. Earnings per share of $2.80 rose from $2.26 the previous year.

IBM provided few other details. The company plans to release more information Thursday, when its results were originally scheduled to come out. But it was enough to comfort many analysts who have been watching for signs of a downturn in tech spending.

"There are worries about the credit market … (and whether) we are at the beginning of what could be a larger recession," says tech analyst Charles King at researcher Pund-IT. "IBM's earnings should be seen as good news."

IBM shares rose 5% to close at $102.93 Monday, giving the company a market value of nearly $142 billion.

But that doesn't mean investors should expect equally impressive numbers from other tech firms as the corporate earnings season kicks off. IBM is unique because it's so big, and does so much of its business outside the USA, says tech analyst Eugene Zakharov at Technology Business Research.

The weak dollar helped IBM by making its products and consulting services less expensive in other countries, Zakharov says. And IBM got a boost from a strong presence in emerging nations. IBM has nearly 100,000 of its 356,000 employees in Brazil, Russia, India and China.

Growth in the quarter was "led by strong operational performance in Asia, Europe and emerging countries," IBM CEO Sam Palmisano said in a statement.

Also boosting earnings: IBM's decision to shed low-margin hardware businesses, such as PCs and disc drives. "It really paid off," as IBM can now focus on lucrative consulting deals, Zakharov says.

But 2008 may be tougher. There are signs that the worldwide economy may stumble, causing sales to slip even for such a big, stable company, says equity analyst Tom Smith at Standard & Poor's. Smith forecasts 5% growth for IBM this year and about 7% in 2009.

Investors may get a better picture of the U.S. market when No. 1 chipmaker Intel intc reports results Tuesday, followed by Microsoft msft on Jan. 24.

"We've seen (signs of) weak consumer spending," especially in the USA, says Smith. But since IBM sells mainly to big businesses, the company "might not show that weakness," he says. Intel, which makes chips for about 80% of all PCs, and Microsoft, which provides the operating system for about 90% of them, might be better indicators.