Thanks to a strong jump in revenue generated by its middleware software brands, IBM recorded profits of $3.54 billion (£1.79bn) for the fourth quarter, a rise of 11.1% over the same period in the previous year.
The company had revenue of $26.3bn for the quarter ending 31 December, an increase of 7.5% from last year and better than Wall Street estimates of $25.7bn, according to analysts polled by Thomson Financial.
IBM relied heavily on revenue from its middleware group, which includes WebSphere, Information Management, Tivoli, Lotus and Rational. Together, those products generated $4.4bn (£2.23bn), up 18% from this quarter last year.
Other IBM business units’ revenue rose by only single digits, including a rise of 7% for global technology services, 3% for global financing, and 3% for the systems and technology group, which includes System z servers.
For the full year of 2006, IBM reported total revenue of $91.4bn (£46.35bn), a rise of 4% over 2005, excluding the PC business sold to Lenovo Group. IBM recorded annual net income of $9.49bn, up 19.6% from its mark of $7.93bn last year.
All of IBM's middleware brands grew faster than the overall market, senior vice president and chief financial officer Mark Loughridge said on a conference call to discuss the quarter's results.