Ahead of the Bell: IBM shares gain on strong 4Q

IBM shares continue to rise in premarket trading on better-than-expected 4th-qtr results

Associated Press

NEW YORK (AP) -- IBM shares continued to climb before Wednesday's opening bell, after the technology company announced better-than-expected quarterly results and offered strong 2013 guidance.

The higher profit, which came despite flat revenue, marked the company's 40th-straight quarter of increases and initially sent shares rising in Tuesday's aftermarket session. In premarket trading, IBM shares added $7.37, or 3.8 percent, to $203.45.

Armonk, N.Y.-based IBM is seen as a good gauge of technology demand because it sells to major companies and governments around the world. That said, it's not completely immune from economic fluctuations. Its revenue missed Wall Street's expectations in the third quarter, something IBM attributed largely to the economic turmoil in Europe and elsewhere.

Sterne Agee analyst Shaw Wu attributed the strong fourth-quarter results to higher software sales and a faster-than-expected rebound at the company's hardware business. He backed his "Buy" rating and $230 price target for the company.

"What we found impressive is the company was able to accomplish this despite services somewhat lagging and most competitors underperforming, indicating IBM gained share," Wu wrote in a note to investors.

But Janney Capital Markets analyst Joseph Foresi kept a "Neutral" rating on the stock, a component of the Dow Jones industrial average. He said that while the quarterly results and guidance appear to "put the company back on track," questions remain about the future performance of its services business, which is a key driver of its stock.

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