International Business Machines Corp. topped fourth-quarter expectations by a healthy margin, with strong overseas sales and a weak dollar helping to generate a profit of $3.04 billion.
The profit, which amounted to $1.80 per share, was up sharply from a year ago, when IBM posted a net income of $2.71 billion or $1.55 a share for the final three months of 2003.
Fourth-quarter revenue rose 7 percent to $27.67 billion compared with the year-ago tally of $25.91 billion. About 4 percentage points of the gain was driven by the rising value of the euro and other currencies against the dollar -- which makes U.S. products less expensive overseas and foreign sales more valuable when converted back to dollars.
Both the profit and revenue figures exceeded Wall Street forecasts. Analysts had expected a fourth-quarter profit of $1.76 per share with sales of $27.5 billion, according to a survey by Thomson First Call.
IBM's shares had risen in advance of the report, which was released after the close of Tuesday's trading. In after-hours trading, the stock was up 15 cents at $95.05 after rising 80 cents, or about 0.8 percent, during the regular session on the New York Stock Exchange.
Revenues from computer support services sold to businesses, including consulting, outsourcing and maintenance, grew 10 percent to $12.6 billion.
New services contracts signed during the quarter totaled $12.7 billion, leaving the company with an estimated work backlog of $111 billion, down from about $120 billion at the end of 2004. About half of that decrease came from the loss of a major account with J.P. Morgan Chase & Co., the company said.
Hardware revenues increased 4 percent to $9.5 billion, including $3.5 billion from the personal computer business which in IBM agreed to sell to Lenovo Group Ltd. in December. As part of that deal, IBM will hold a 20 percent stake in a new company combining Lenovo's PC business with IBM's.
Elsewhere in IBM's operations, sales of software rose 7 percent to $4.5 billion.
On the expense side, selling and general costs increased 9 percent to $5.3 billion, while investment in research and development increased 8 percent to $1.5 billion.
For all of 2004, net income totaled $8.43 billion, or $4.93 per share, on revenues of $96.50 billion. That compares with 2003's full-year results of $7.58 billion, or $4.32 per share, in net profit with revenues of $89.13 billion.
"If we look at 2004, we had the strongest organic performance we've had in years," Mark Loughridge, IBM's chief financial officer, said in a conference call with analysts after the report.
The full-year 2004 results include a $320 million pre-tax charge from a legal settlement reached in September resolving age-discrimination claims regarding IBM's cash-balance pension.
Meanwhile, in a bid to reign in its overall pension obligations, IBM announced in December that it was excluding new workers from the cash-balance plan and offering them only a 401(k) savings plan.