I have put IBM (NYSE: IBM) in with a group of handful of companies that I believe can continue to increase their profits in almost any economic environment. These are companies that if they cannot grow by general economic growth they will take market share from their competitors, develop new streams of revenue or control expenses to an even greater extent. Yesterday, IBM released their 1st quarter results and even though they were not sterling, I thought the company did very well considering the current economic environment.

I read the press release and the transcript of the conference call and here are some of the positives I took from those releases. First up the net income number: IBM earned $1.70 per share for the quarter compared to $1.64 a year earlier and the consensus of $1.66. Net income of $2.3 billion was actually down 1% but the per share amount increased due to the company's stock re-purchase program, which has reduced the shares outstanding by 4%. Revenues decreased by 11% in dollar terms but only fell 4% before currency conversion.

Here are some of the numbers I find promising concerning the future of IBM:

• The company has $12.3 billion in cash.
• Free cash flow for the 1st quarter was $1 billion, up from 450 million a year earlier.
• Gross profit margin continues to increase, up 1.9%.
• Reduced debt by $3 billion.
• Forecasts full year 2009 earnings of $9.20 compared to $8.93 for 2008.

IBM continues to reshape their business by building a book of long term service contracts that are a more stable revenue stream than hardware or software sales. At the same time they are working to slash cost and expenses, which can be seen by the increased profit margin percentages in all lines of business. An important figure for future revenues are the contract signings for the Global Services segments. These segments now account for 60% of revenues and new contracts signed were up 10%, with new long term contracts increasing 27%. I find it an amazing number that the company was able to sign 16 new contracts with values over $100 million each.

IBM is a $100 billion company (revenues and market cap) that is focused on improving the bottom line and has a plan that is working. The company has changed its business focus to offering long term service contracts that help their customers manage their businesses more efficiently. Right now revenue growth has stagnated and net income is growing very slowly, but management stays on track to continue to increase future profits. I would not bet against IBM surpassing their own guidance for 2009. A final note on IBM: They have increased the dividend with the June pay-out consistently for at least the last 10 years.

As I stated at the beginning of the article I count IBM amongst a handful of companies that I think will continue to increase their profits in these difficult economic times (or any kind of economic times!). Along with IBM, keep an eye on Walmart (NYSE:WMT), McDonald's (NYSE: MCD), Coca Cola, (NYSE:KO) and Apple, (NASD:AAPL). I think these companies show the kind of management and ability to completely control their businesses that other smaller companies can learn from.