IBM Hangs Tough (Update)

Services contract signings of $12.7 billion was 4% lower year over year, while short-term services signings rose 13%, reflecting a shift in corporate spending patterns to covering only immediate business needs.

When it preannounced earnings on Oct. 8, Big Blue revealed that its top line came up short of analysts' expectations, while beating the Street's earnings estimate. The company earned $2.05 a share, up 22% year over year, on revenue of $25.3 billion in the quarter. Analysts had been expecting EPS of $2.01 on revenue of $26.5 billion.

Net income rose 20% to $2.8 billion, from $2.4 billion, or $1.68 a share, in the year ago period.

Gross margin rose to 43.3%, from 41.3% for the same quarter of last year. The company spent $2.7 billion to repurchase shares on a cash basis.