Big Blue's mega-bucks boost tech mood

Tech industry bellwether IBM reported first-quarter profits yesterday which met expectations amid solid revenue growth in its hardware, software and services divisions.

Big Blue posted profits from continuing operations of 93 cents per share for the quarter, up 18 per cent year-on-year and in line with analysts' average expectation, according to research firm Thomson First Call. First-quarter revenue from continuing operations was $22.2bn - a rise of 11 per cent from the first quarter of 2003 and above analysts' average forecast of $21.9bn.

In a conference call, IBM CFO John Joyce indicated that companies are relaxing their grip on the purse strings for technology purchases.

"When we reported fourth-quarter results three months ago, we told you that we were starting to see improvement in the IT environment," Joyce said. "This quarter's results reaffirm this view."

The results boost hopes that a stronger recovery in technology spending is under way. Chipmakers Intel and AMD, as well as data storage specialist EMC, recently have reported improved financial results. Research firm IDC predicts that spending on information technology will rise by five per cent worldwide this year, coming after growth of two per cent in 2003 and declines the previous two years.

Ed Frauenheim writes for News.com