IBM Strong Q4 to Spur 2008 Growth

Meanwhile, as services remain a core driver of IBM's revenue, global services grew 17 percent. Global technology services grew 16 percent to $10 billion and global business services, including consulting and application management services grew 17 percent to $.9 billion.

However, IBM's systems and technology revenues were down by 4 percent.

Josh Farina, another analyst with TBR, said he thinks IBM feels the need to get closer to its customers after two straight quarters of hardware revenue declines. "The company is aiming to leverage tighter sales relationships with its large enterprise customers, but also talk the talk with small and medium-sized businesses in an effort to pump up sales of everything from its System z mainframes to its System x servers," Farina said.

Earlier this month, IBM announced a restructuring of its Systems and Technology Group (STG) to deliver a segmented approach to how the company sells hardware. IBM restructured the group into four segments: Enterprise Systems, Business Systems (SMB), Industry Systems and Microelectronics. "The reorganization is particularly important to IBM as the company seeks to increase its SMB market share, particularly in emerging geographies, where IBM and HP continue to vie for market share," Farina said.

Yet, "TBR believes IBM has its work cut out for it as its revenue decline came from factors including weak System z sales, weak microelectronics results and was also impacted by lost revenue after the sale of IBM’s printer business," Farina said.

IBM's strong fourth-quarter showing leaves the company with a rosy outlook for 2008.

"As we begin 2008, IBM is well-positioned as a result of our global business reach, solid recurring revenue and profit streams, and strong financial position," Palmisano said in a statement.