NEW YORK (CNNMoney.com) -- IBM reported strong earnings Monday and boosted its outlook for the rest of the year, citing a double-digit increase in software sales.
The Armonk, N.Y.-based tech giant said its profit for the first quarter rose to $2.6 billion, up 13% from last year.
The company earned $1.97 per share, beating expectations and jumping 16% from the same quarter last year. Analysts polled by Thomson Reuters were looking for earnings of $1.93 per share.
Sales rose in the first quarter by 5% to $22.9 billion, beating analysts' forecast of $22.75 billion. Revenue was boosted by growth in the company's software sector, which increased 11%.
"We had a very good start to the year," Mark Loughridge, IBM chief financial officer, said in an earnings call. "Our best growth came from software, which is our most profitable and highest value area."
The company's systems and technology sector also improved in the first quarter, rising 5% after dropping 4% in the previous quarter.
"Systems and technology returned to revenue growth this quarter," said Loughridge. "I expect this growth rate to accelerate through 2010."
IBM raised its outlook for the rest of the year, expecting 2010 earnings of at least $11.20 a share, up from $11 per share in its previous forecast.
"I feel good about the guidance and I feel good about the business as we exit the first quarter," Loughridge said.
Moshe Katri, managing director at Cowen and Company, said a "big chunk" of the disappointment among investors was due to weakness in IBM's service bookings, which dropped 2% in the first quarter.
But that's not a reason to give up on the company, said Moshe. Investors who stick with IBM stock will be rewarded in the long run, as increased sales in its services and software sectors continue to spur growth.
"This is a company that has consistently been able to beat expectations," he said. "Assuming the IT spending environment goes back to a somewhat normalized rate, we're going to see [IBM] continue to do pretty well."
The historically black school will cover 50% of the cost of a a student's final semester if they graduate early or on time, starting next year. More
House of Cards' season 3 starts with Frank Underwood trying to pass a bogus economic policy More
Startup HEAL promises a doctor at your doorstep in under 60 minutes, for a flat fee of just $99. More
In Buffalo, New York, the city is selling vacant homes for a $1 to those who are willing to fix them up and live in them for a few years. But as many buyers soon find out, the cost to renovate these super cheap properties can quickly add up. More