IBM recorded profits of US$3.54 billion for the fourth quarter, thanks mainly to a big jump in middleware revenue. This represents a rise of 11.1 percent over the same period in the previous year.

The company had revenue of $26.26 billion for the quarter ending 31 December, an increase of 7.5 percent from last year and better than Wall Street estimates of $25.67 billion, according to analysts polled by Thomson Financial. IBM posted earnings of $2.26 per share, excluding extraordinary one-time gains, beating the analyst forecast of $2.19 and the $2.11 it posted in the same quarter of the previous year.

IBM relied heavily on revenue from its middleware group, which includes WebSphere, Information Management, Tivoli, Lotus and Rational. Together, those products generated $4.4 billion, up 18 percent from this quarter last year.

Revenue from other IBM business units rose by only single-digit percentages, including a rise of 7 percent for global technology services, 3 percent for global financing, and 3 percent for the systems and technology group, which includes System z servers.

For the full year of 2006, IBM reported total revenue of $91.4 billion, a rise of 4 percent over 2005, excluding the PC business sold to Lenovo Group. IBM recorded annual net income of $9.49 billion, up 19.6 percent from its mark of $7.93 billion last year.