Backlog bodes well for IBM

Article Excerpt

IBM $144.17 (New York symbol IBM; Shares outstanding: 1.2 billion; Market cap: $179.1 billion; SI Rating: Above Average; Dividend yield: 1.8%) reported better-than-expected earnings in the latest quarter, thanks to rising demand for its mainframe computers, software and computer services. In the three months ended September 30, 2010, IBM’s earnings rose 11.7%, to $3.6 billion from $3.2 billion a year earlier. Earnings per share rose 17.5%, to $2.82 from $2.40, on fewer shares outstanding. The latest earnings beat the consensus estimate of $2.76 a share. Revenue rose 3.0% in the latest quarter, to $24.3 billion from $23.6 billion. The company signed $11.0 billion of new service contracts in the latest quarter. That’s down 7% from a year earlier. However, IBM signed a major outsourcing deal just after the quarter ended. If you include this contract, new orders are up 14% from a year earlier. IBM’s order backlog was $134 billion on September 30, 2010. That’s equal to about 1.4 times…