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Shares of IBM Corp. fell nearly five per cent Friday even though the computer services giant generated healthy fourth-quarter profits as the company rode cost cuts and software acquisitions to boost its bottom line.IBM’s earnings report, released after the market closed Thursday, showed an 11 per cent gain in net profit, to US$3.54 billion, or $2.31 per share, on revenue of $26.3 billion.

Five cents per share of profit came from gains related to discontinued lines of business, so continuing operations earned $2.26 per share.

That was well above the $2.19 per share and $25.7 billion in revenue expected by analysts surveyed by Thomson Financial. But investors apparently wanted even more. Six cents of the earnings upside stemmed from beneficial changes in the company’s tax rates.

The quarterly figures all surpassed results from a year earlier, when profit was $3.19 billion, or $1.99 per share, and revenue was $24.4 billion. However, profit in that comparison quarter was dragged down about $200 million after taxes, or 12 cents per share, by a one-time accounting charge and costs IBM incurred in freezing its pension plan.

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