IBM Says Full-Year Earnings Will Beat Estimates

IBM Corp. on Monday posted a flat quarterly net profit, weighed down by a legal settlement, but the world’s largest computer company sounded a confident outlook and its shares rose 2.3% in after-hours trading.

Excluding the costs of the legal settlement, third-quarter earnings exceeded analysts’ estimates. The company also said full-year earnings would top Wall Street estimates, indicating that fourth-quarter profit would be better than expected.

Third-quarter net income for the Armonk, N.Y.-based company rose to $1.80 billion, or $1.06 a share, from $1.79 billion, or $1.02, a year earlier.

Revenue rose 9% to $23.4 billion, in line with Wall Street forecasts, according to a survey by Reuters Estimates. Excluding the benefit of the weak dollar, which boosts the value of overseas sales when funds are converted, revenue grew 5%.

Excluding pension charges, IBM recorded a third-quarter operating profit of $1.17 a share.

The forecasts excluded a pre-tax charge of $320 million, or 11 cents a share, for the partial settlement of employee lawsuits over efforts by IBM to revise its pension plans in the 1990s.

Analysts, on average, had been looking for operating earnings of $1.14 a share, according to Reuters Estimates.

Chief Financial Officer Mark Loughridge said that firming customer demand was helping IBM shrug off economic shocks such as higher oil prices and technology pricing pressures.

IBM shares rose $1.98 in after-hours trading to $87.90, after closing up $1.07 at $85.92 on the New York Stock Exchange.