IBM has reported second quarter net income of $3.7bn, up 8% on the same quarter last year, and revenue of $26.7bn, which was $1.35bn more than had been expected by analysts and 12% up on the previous year.
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The company also lifted its full-year earnings forecast to at least $13.25 a share, ahead of analysts' average estimate of $13.21.
"In the second quarter, our long-term strategic investments in the company's growth initiatives again helped drive strong revenue performance," said Sam Palmisano, IBM chief executive.
The increases were driven by strong growth in sales of both software and hardware, both up 17% compared with the same period the year before to $6.2bn and $4.7bn respectively.
Mark Loughridge, chief financial officer, said growth was due mostly to upgrades in the regular product-refresh cycle, rather than new sales.
However, IBM acquired 68 new mainframe customers, which accounted for a 61% increase in mainframe server products and will boost sales of IBM services.
Analysts say IBM is moving to more profitable lines of business, focusing on software and services after ditching its hard disk drive, personal computer and printing units.
Although some reports said shares fell slightly on the results, investors responded positively in after hours trading, when shares rose 3%, according to the Financial Times.