International Business Machines Corp's quarterly profit blew past Wall Street estimates, and a pick-up in services contracts raised hopes that global companies were confident enough to spend more on technology.
IBM shares rose 2.4 percent after-hours to $154.34 after the company reported quarterly net income of $5.3 billion, or $4.18 per share, compared with $4.8 billion, or $3.59 per share, a year earlier.
Analysts on average expected earnings per share of $4.08, according to Thomson Reuters I/B/E/S.
The company on Tuesday forecast 2011 earnings per share of at least $12.56, up from $11.52 in 2010. It also reiterated its target of achieving earnings per share of around $20 by 2015.
IBM managed to reverse a decline in signings of services contracts, an early indicator of future revenue from outsourcing and other IT projects. It signed services contracts worth $22.1 billion during the quarter, up 18 percent.
It's an indication of increased spending for the IT sector. As goes IBM so goes corporate America these days, said Annex Research analyst Bob Djurdjevic.
(Graphic on IBM and its peers http://r.reuters.com/sac96r)
Revenue rose to $29.0 billion from $27.2 billion, higher than the market's forecast for $28.3 billion.
Sluggish signings had been seen as the company's weak point in recent quarters, and a signal that many corporate clients were wary of multi-year technology investments.
(Reporting by Ritsuko Ando; Editing by Gary Hill)