IBM profits plunge 97 per cent

Technology bellwether, IBM has reported a 97 per cent slump in profits due to a huge $2.1bn charge for jobs cuts and restructuring.

For its second quarter, Big Blue turned in profits of $56m - a far cry from the $2bn it earned in the comparable quarter of last year.

The company accumulated charges of more than $800m relating to jobs cuts and a further $825 for the restructuring of its microelectronics business. In addition, the sell-off of its hard disk business to Hitachi forced IBM to write-off $428m.

But while figures are broadly in line with the expectations set by analysts, Big Blue's boss has warned that technology spend for the rest of this year is unlikely to reach the levels predicted by industry watchers.

Sam Palmisano also explained how the second quarter had been "one of the most difficult capital spending environments we've seen in decades".

But IBM's share price did not fair badly in the wake of the news, despite having already dropped 40 per cent in the last year.

At close its share price was up more than two per cent and gained an extra 0.30 per cent in after hours trading.