IBM surprised Wall St in a nice way yesterday by posting unexpectedly positive results, with its profits jumping 26 percent and surprising even the most optimistic of Wall Street analysts. Even its U.S. operations performed well last quarter, in what was measurably a slowing economy. The raw figures were: revenue up 11% to $24.5 billion and profit up 26% to $2.32 billion. IBM did well across the board with service revenues (which account for 60% of the total) rose 17% and software revenues were up 14 percent to $4.85 billion.

I was expecting IBM to show better financial results soon given that its firing on all cylinders (see the posting Ten Reasons Why IBM Is Alive and Kicking that followed IBM’s fall EMEA analyst conference). In fact I’d been expecting it sooner but never mind.

If you look at the Leader Board above (a bar chart of the value by market cap of the 10 largest IT companies) IBM has now risen above Intel, Apple, Cisco and Google in the past 3 months or so. Click here to see the situation at end 2008. Both Google and Apple have lost value, Google because it turned in a weak quarter and Apple because its now believed that both iPhone and iPod sales may underperform. There is also an expectation that we’re heading into a US recession and both Google and Apple are more dependent on the US economy than IBM.

As regards the recession, there are mixed feeling about what it will mean for IT. There are some areas of IT that will likely do better in a recession (see Technology Investment and the Recession) but right now nobody I talk to among the IT vendors are seeing a significant slow down. This may have something to do with how the recession has emerged, via the housing sector into the banking sector. Spending on IT in the housing sector is miniscule and the banks are not curtailing IT spending yet.

So far, so good, for IT.