Pension deal bites into IBM profit

Technology industry bellwether IBM on Monday reported a healthy rise in net income in the third quarter, but its overall results were hampered by a $320 million legal settlement related to its employee pension plan.

The Armonk, N.Y.-based company also increased its full-year forecast of earnings per share by 3 cents to $4.99 and took a cautiously optimistic tone about future spending on technology by corporations.

"This pattern of moderate expansion continues," Mark Loughridge, IBM's chief financial officer, said in a conference call on Monday. He added that corporate spending is growing at about 4 percent or 5 percent per year--consistent with the second quarter of 2004 and the best since 2000.

For the third quarter ended Sept. 30, IBM said that earnings were $1.8 billion, or $1.06 per share, after the pension-related charge is taken into account. That compares with $1.79 billion for the same period last year--a rise of 1 percent. Without the charge, third-quarter income would have been $2 billion, an increase of 12 percent.

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