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IBM meets earnings target, talks of new jobs

Big Blue hits Wall Street's average earnings estimate and talks about the need for 10,000 new jobs next year.

IBM on Wednesday met analysts' average earnings estimate for the third quarter and said it saw the need for about 10,000 new jobs next year.

Big Blue reported earnings per share from continuing operations of $1.02, up from 99 cents per share in the third quarter of 2002 and in line with the average estimate of analysts polled by researcher First Call.

IBM's revenue from continuing operations for the third quarter of 2003 was $21.5 billion, up 9 percent year-over-year but shy of analysts' average expectation of $21.9 billion.

Although IBM has been cutting jobs, CEO Sam Palmisano indicated that the company is also looking to add positions.

"We are beginning to see signs that the economy has stabilized," Palmisano said in a statement. "As we look to 2004, more customers are expected to increase their investments in information technology. While demand is not yet across the board, it is strongest in the areas where we have positioned the company and strengthened our capabilities. Next year, in fact, we see the need for approximately 10,000 new positions in key skill areas, including high-value services, middleware technologies, Linux and open standards-based hardware and software."

IBM's earnings news comes amid some positive signs for the technology industry overall. Chip giant Intel reported third-quarter profits Tuesday that exceeded analyst expectations, as revenue jumped 20 percent on strong demand for computer processors.

Also this week, investment firm Credit Suisse First Boston released a survey finding that 47 percent of chief information officers project at least a moderate spending increase in 2004, while 36 percent expect to hold capital spending flat. Only 17 percent of respondents believe that their capital budgets will be reduced in 2004, down from a third of participants during 2003, according to the report.

IBM said revenue from its Global Services division increased 17 percent in the third quarter to $10.4 billion aided by the addition of the former PricewaterhouseCoopers Consulting business. Software revenue increased 11 percent to $3.5 billion. Total hardware revenue from continuing operations decreased 1 percent to $6.7 billion. Global Financing revenue slid 10 percent to $715 million. Revenue from the "Enterprise Investments/Other" area, which includes industry-specific information technology products such as product life-cycle management software, increased 3 percent compared with the third quarter of 2002 to $266 million.

IBM has continued its push toward so-called on-demand computing, which is part of a broader industry trend toward treating computing power as a utility.

Big Blue announced a mid-November shipping date for a product to link servers and data storage devices for better information access and management.

The company also celebrated the one-year anniversary of its purchase of PricewaterhouseCoopers' consulting unit, which has strengthened IBM's services wing.

But Big Blue has experienced negative publicity as well. The company is facing a trial for chemical poisoning claims by cancer-stricken factory workers.