With profit and sales up, IBM boosts guidance

IBM Corp.Armonk, N.Y.-based IBM raised its income guidance for the year on Monday as earnings in the latest quarter increased 8 percent because of growth in all three of its major product categories.

The results show the strength of the 100-year-old company's efforts to link its mainframes and other computing hardware with its newer businesses, software and services.

Those two categories bring in the bulk of IBM's income.

Signings of new contracts for services increased -- a welcome sign for Wall Street after a decline last quarter.

But the company faces questions about whether its profit increases are sustainable. Some analysts worry about increased competition, specifically in outsourcing, the biggest part of IBM's services business.

Net income was $3.66 billion, or $3 per share, in the second quarter compared with $3.39 billion, or $2.61 per share, a year ago. Excluding items, IBM earned $3.09 per share, ahead of the $3.02 per share analysts expected.

Revenue increased 12 percent to $26.7 billion, ahead of the $25.4 billion analyst estimate.

Guidance for 2011 calls for at least $13.25 per share, excluding items, up from the previous estimate of $13.15 per share.

But the company's history makes it subject to high expectations. IBM has not only consistently raised its guidance, but it has also taken the rare step of setting a specific long-term profit goal -- $20 per share in operating earnings by 2015. So investors now expect steady guidance increases.

Halliburton Co.The world's second- largest oilfield-services provider said second-quarter profit increased 54 percent as higher crude prices led to more spending on exploration and production in North America.

Net income rose to $739 million, or 80 cents a share, from $480 million, or 53 cents, a year earlier, Houston-based Halliburton reported Monday. Excluding costs from job cuts, the company earned 7 cents a share more than the average of 35 analysts' estimates compiled by Bloomberg. Sales climbed 35 percent to $5.94 billion.

Oil and natural-gas companies are expected to spend $122 billion in the U.S. this year on exploration and production, 22 percent more than last year, James Crandell and Omar Nokta, analysts at Dahlman Rose & Co., wrote in a June 7 note to investors.

The average number of active U.S. oil and gas rigs rose to 1,826 in the second quarter, up 21 percent from 1,506 a year ago, according to Baker Hughes Inc.

Sales in North America, Halliburton's largest region, rose 63 percent to $3.45 billion from $2.11 billion a year earlier.

Oil prices rose 31 percent to average $102.34 a barrel on the New York Mercantile Exchange in the second quarter, up from $78.05 a year ago.

Charles Schwab Corp.The largest independent U.S. brokerage by client assets reported second- quarter profit that matched the average analyst estimate as interest income offset a decline in trading.

Net income rose 16 percent to $238 million, or 20 cents a share, from $205 million, or 17 cents, a year earlier, the San Francisco-based company reported. Analysts estimated profit of 20 cents a share, according to the average in a Bloomberg survey. Net revenue climbed 10 percent to $1.19 billion, beating the average analyst projection by 0.7 percent.

Gannett Co.The owner of 82 newspapers as well as television stations reported second-quarter profit decreased 22 percent as circulation and print advertising declined. The company also doubled its dividend.

Net income dropped to $151.5 million, or 62 cents a share, from $195.5 million, or 81 cents, a year earlier, .McLean, Va.-based Gannett reported Monday. Excluding some items, earnings fell to 58 cents a share. Analysts predicted 56 cents, the average of estimates compiled by Bloomberg.

Gannett, whose newspapers include USA Today, is the first large newspaper owner to report its results for the quarter, making it an indicator of how the industry is faring.

Publishing revenue, including advertising and circulation, declined 4.9 percent to $977.1 million. Digital revenue rose 13 percent. Total revenue fell 2.2 percent to $1.33 billion, matching the average analysts' estimate.

Last month, Gannett Co. said it plans to cut about 700 jobs at its community-newspaper unit as it struggles with continuing weakness in local and national advertising.

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