IBM raises annual earnings forecast as Q2 beats estimates

IBM, the largest IT services company in the world, has raised its annual earnings forecast after second-quarter profits beat analysts' estimates. The surge was was instigated by cost cutting and share buybacks.

The company made a profit of $3.91 (£2.57) a share in the last quarter, excluding a $1 billion ($657.85 million) workforce restructuring cost, beating analysts' expectations of $3.78 (£2.49). This brought the total revenues for the second quarter of 2013 to $24.9 billion (£16.38 billion).

The positive result has allowed the company to up its forecasted earnings for the year to at least $16.90 (£11.12) per share, up from $16.70 (£10.99).

"In the second quarter, we delivered strong performance in our higher-value software and mainframe businesses and again significantly increased our services backlog on growth in new business," said Ginni Rometty, IBM chairman, president and chief executive officer.

"Going forward, we will continue investing in our strategic growth initiatives, acquiring and divesting capabilities, re-balancing skills and taking action in the areas that are not performing.

"We expect continued improvement through the second half of the year and remain confident that we will achieve our increased 2013 operating EPS expectation of at least $16.90 (£11.12), excluding the $1 billion ($657.85 million) workforce rebalancing charge in the second quarter."

Beating the quarter's earnings estimates has allowed IBM to bounce back from a surprising falter in the previous quarter, when it missed earning estimates for the first time in eight years.

Total revenues for the first six-months of 2013 were $48.3 billion (£31.77 billion), down two per cent compared with $50.5 billion (£33.22) for the first six months of 2012.

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