NEW YORK—Shares of International Business Machines Corp. jumped in premarket trading after Big Blue unexpectedly said its fourth-quarter earnings from continuing operations rose 24 percent from a year ago, widely beating analyst expectations.
The report, posted ahead of its quarterly financials expected Thursday, sent shares up $8.28, or 8.5 percent, to $105.95 premarket, from their close Friday at $97.67 in heavy trading.
"We take this news as a positive indication of the strength of worldwide IT demand," said Wachovia Capital Markets analyst David Wong. "It remains to be seen whether there are any pullbacks in U.S. corporate IT spending budgets for 2008, though we take this news to indicate that there was probably not that much weakening in U.S. IT demand in the December 2007 quarter."
IBM's report helped boost futures trading and the tech-heavy Nasdaq-100 Premarket Indicator, which pointed to a strong opening on the U.S. markets, following Friday's big selloff.
Other tech companies gaining in early trading included Intel Corp., the world's largest chipmaker, and like IBM a component of the Dow Jones industrial average.
Intel shares added 93 cents, or 4.2 percent, to $22.92 premarket, from their close at $21.99 Friday. Microsoft Inc., also a Dow component, added 78 cents, or 2.3 percent, to $34.69, from its close at $33.91.
And shares of Apple Inc., which this week hosts its annual MacWorld conference, was up $4.90, or 2.8 percent, to $177.59, from its close Friday at $172.69.
Banc of America Securities analyst Craig Scott credited Apple's introduction of its Leopard operating system for strong sales of Mac computers, and raised his earnings expectations for Apple. Noting concern for tech overall because of recent economic trends, Scott said, "While none of our names are immune from economic changes, we believe that Apple is less likely to be impacted by such changes due to the company's unique and diversified business model, loyal customer base, and market share gains."
On the downside, shares of Opnext Inc. continued to sink after a 36.5 percent decline in Friday's trading, after the Eatontown, N.J., company lowered its sales guidance for its fiscal third quarter, citing lowered demand.
That announcement generated a host of negative comments from analysts, including a downgraded from Needham & Co. to "Buy" from "Strong Buy." Analyst John Harmon noted the company canceled an appearance at a conference the investment house sponsored last week, which could have helped ease investors into the news and avoid Friday's "meltdown."
Shares fell 197 cents, or 4.3 percent, to $4.23 premarket, from their close at $4.42.
