NEW YORK (CNNMoney.com) -- IBM posted a fourth-quarter profit Tuesday that beat Wall Street expectations. The tech giant also pointed to an improved outlook for 2010.
The Armonk, N.Y.-based company reported a profit of $4.81 billion, or $3.59 per share, which was 9% higher than what IBM reported last year.
Analysts polled by Thompson Reuters expected $3.47 per share.
Sales rose a modest 1% to $27.2 billion, slightly ahead of forecasts.
Sales in the company's services sector and software sector each increased 2%, while revenue in its hardware business fell 4%.
IBM expects to improve its revenue performance in 2010.
"There were a number of large deals that did not close during the fourth quarter and have contributed to a very strong first quarter opening pipeline," said Mark Loughride, IBM senior vice president and chief financial officer, during a conference call. "And consequently, we expect software to grow revenue double digits in the first quarter."
He added that the company's software business has almost tripled since 2000.
IBM said it expects earnings per share of at least $11 for the full year. In its last forecast, the company said it was "well ahead" of pace to earn between $10 and $11 per share in 2010.
"We are confident about 2010 and our ability to achieve the high end of our long-term roadmap," IBM chairman, president and chief executive Samuel Palmisano said in a prepared statement.
While cost-cutting measures boosted 2009 earnings, Loughride said 2010's numbers will be lifted by higher revenue.
"IBM had very solid results. But investors were hoping for an even better guidance," said Peter Misek, analyst at Canaccord Adams.
He added that IBM's estimate of $11 in earnings per share is "very conservative," and that the company is likely to see the figure closer to $11.50 or beyond if the economy continues to gain strength.
For the full year, IBM reported a profit of $13.4 billion, or $10.01 per share, on revenue of $95.8 billion. That compared with earnings of $12.3 billion, or $8.89 per share, on revenue of $103.6 billion in 2008.
The strong showing for text messaging tech firm Twilio shows investors are willing to bet on risky IPOs again after Square's flop last year. Next up? Asian social media giant Line. Will other big unicorns like Uber and Airbnb follow? More
Investors are already sifting through the Brexit market rubble for opportunities. Morgan Stanley compiled a list of highly-rated stocks that have limited or no direct exposure to the situation in the U.K. More
Facebook is changing News Feed to prioritize posts from users' friends over material shared by publishers. It's also sharing its "values" for the first time. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
The coveted British passport is losing its luster following Britain's decision to leave the European Union. Instead, Ireland has seen a surge in passport applications. More