International Business Machines Corp's stronger-than-expected quarterly profit and a pick-up in technology services contracts raised hopes that global companies were becoming 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.

IBM managed to reverse a decline in signings of services contracts, including bookings for outsourcing and other IT projects. It signed services contracts worth $22.1 billion during the quarter, up 18 percent.

Revenue rose to $29.0 billion from $27.2 billion, higher than the market's forecast for $28.3 billion.

Weak signings had been seen as the company's weak point in recent quarters, and a signal that many corporate clients were wary of multiyear technology investments.

(Reporting by Ritsuko Ando; Editing by Gary Hill)