IBM last night posted surprisingly strong results that were helped by the weak dollar and signalled a rebound in technology spending by businesses.
IBM said it had outpaced its fourth-quarter target for new services contracts, a key measure of future sales in its biggest unit.
Growth in that services business is the key to further gains in IBM's share price, one analyst said, pointing out that some analysts had expected the new contract signings to miss IBM's $14 billion target for the quarter.
The company, based in Armonk, New York, said fourth-quarter net income rose to $2.7 billion, or $1.55 a share, compared with $1 billion, or 59 cents a share, a year earlier. In the fourth quarter of 2002, IBM took charges of $1 billion.
IBM said revenue rose 9 per cent to $25.9 billion compared with $23.7 billion a year earlier. Without the boost provided by currency translation, revenue rose just 1 per cent.
IBM's positive take on technology spending comes after a three-year slump and follows strong earnings reports from other technology players such as Yahoo. and Intel.
Although consumer buying has picked up and helped PC makers Dell and Apple Computer in recent quarters, IBM did not benefit as business spending lagged.