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IBM profit jumps, but sales fall short

By Julianne Pepitone, staff reporter

NEW YORK (CNNMoney.com) -- IBM posted second-quarter earnings Monday that beat estimates, but its revenue fell short of forecasts.

The tech giant said its net income for the second quarter rose 13% from last year to $2.61 per share, beating expectations. Net income for the quarter was $3.4 billion, up 9% from last year.

Analysts polled by Thomson Reuters expected earnings to be $2.58 per share.

Sales for the Armonk, N.Y., company rose 2% to $23.7 billion, which missed analysts' forecast of $24.17 billion.

IBM, which is a component of the blue-chip Dow index, is the world's largest IT company. Wall Street looks to Big Blue's earnings as an indicator of how much businesses are spending on technology.

The traditionally insulated tech sector has not been immune to the global recession, but experts have been looking for tech firms' earnings to start improving on rebounding demand from business customers.

But Mark Loughridge, IBM's chief financial officer, protested when an analyst suggested that IBM's results imply that IT demand lagging.

"I wouldn't take this as a pullback in spending," Loughridge said on a conference call following IBM's earnings report. "We saw a lot of strength in sectors like software, which had a very strong third month of the quarter."

Monday's report marked the first time in a year that IBM missed revenue estimates. But the company has fallen short of analysts' revenue forecasts for four out of the last eight quarters.

IBM raised its full-year earnings guidance to $11.25 a share, but that too was below analyst expectations.

Shares of IBM (IBM, Fortune 500) fell 4% in after-hours trading. To top of page

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