IBM Corp. said Monday that its net income rose 12 percent as it wrung more out of its services and software divisions and gets a lift from a new mainframe computer.
The technology company also raised its profit forecast slightly for the remainder of the year, demonstrating its skill at increasing profits faster than its businesses are growing.
The stock fell, though, apparently on fears about a dip in IBM’s outsourcing business. IBM said that business would have grown if a big contract hadn’t been signed just after the quarter ended.
IBM earned $3.59 billion, or $2.82 per share, in the July to September period, compared to $3.21 billion, or $2.40 per share, in the same period last year. Analysts on average expected $2.75 per share, according to a poll by Thomson Reuters.
Revenue rose 3 percent to $24.27 billion. Analysts expected $24.13 billion.
The value of the services contracts IBM signed during the quarter fell 7 percent to $11.0 billion. IBM is the world’s top technology-services supplier, and its long-term contracts provide a steady source of revenue even in bad times.
A decline in outsourcing deals led to the shortfall. Mark Loughridge, IBM’s chief financial officer, said that one large outsourcing deal would have caused overall signings to rise if it had been signed 8 days earlier.
The Armonk, N.Y., company’s shares fell 3.7 percent, or $5.22, to $137.61 in extended trading, after the results were reported. They had risen 1.3 percent, or $1.77, to finish the regular trading session at $142.83.
IBM’s new guidance calls for net income of at least $11.40 per share this year. The previous guidance was for at least $11.25 per share. Investors have grown accustomed to IBM raising its guidance, but were expecting a smaller bump to $11.30 per share.
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