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IBM profits jump $500 million

IBM's fourth-quarter results showed an increase in profits by $500 million to a total of $1.7 billion.

Not to be outdone by rival Microsoft, IBM officials this week posted fourth-quarter financials showing $21.9 billion in revenue for the period, up from $19.9 billion a year ago. Profits for the fourth quarter totaled $1.7 billion, or $3.09 per share.

The surge in profits surprised industry analysts. Much of the increase in profits was derived from growth in the company's services area. The services unit posted a 25 percent growth in revenue.

Improved hardware sales, particularly of servers and PCs, also helped push profits up, said officials.

A one-time gain of $175 million from the 1994 sale of the company's Federal Systems Company was also posted. IBM also reported special charges of $663 million related to staff cuts and asset reductions.