IBM shorter contracts surged in U.S.: CFO

By Philipp Gollner

SAN FRANCISCO (Reuters) - IBM's (IBM.N) short-term contracts rose 16 percent in the United States in the fourth quarter, a sign of strength even as the economy slowed, Chief Financial Officer Mark Loughridge said on Thursday.

Short-term signings, typically contracts lasting nine months or less, "are often a good indicator of where we see business going in the future," Loughridge told Reuters in an interview. Short-term signings rose twice as fast in the United States as their 8 percent growth rate for IBM overall.

Loughridge made the comments after International Business Machines Corp reported fourth-quarter results and gave a 2008 forecast that beat analysts' expectations, sending its shares up 5 percent.

"Even in the financial services sector in the U.S., those short-term signings were up," Loughridge added. "That's pretty powerful. What are they looking for now? They're looking to save costs" and are turning to IBM for ways to do so.

For example, financial services clients spent $300 million on so-called green data centers that use less energy than traditional technology for running corporate computers, Loughridge said.

"It's actually a very pragmatic offering to save our customers costs in their business equation," he said.

IBM said fourth-quarter net income rose 12 percent as revenue increased 10 percent, helped by a 17 percent revenue jump in its largest business, global services.

The results and IBM's optimistic 2008 forecast countered investor concern that demand for technology may be waning as the U.S. economy slows amid a worsening housing and credit crisis.

Loughridge said IBM may benefit from a slumping economy as customers buy its technology, software and services to cut costs. Some customers, including banks, cannot afford to cut certain technology expenditures such as those for risk and capital management, data security, cash-flow improvement and real-time financial analytics, he said.

"You can see scenarios where we do better in these types of situations," Loughridge said in the interview. "As we went through the quarter ... We did not see an indication that there was a deceleration."

(Editing by Braden Reddall)