Updated from 4:40 p.m. EDTSAN FRANCISCO -- IBM ( IBM) posted tepid third-quarter financial results as strong gains from technology services and consulting, its biggest unit, mixed with losses in hardware sales. Net income rose to $2.36 billion, or $1.68 a share, from $2.22 billion, or $1.45 a share a year earlier. That beat analysts' consensus forecast by a penny, according to Thomson Financial. Revenue rose 7% to $24.1 billion, in line with estimates, on the back of a 14% jump in total services revenue. IBM also signed $11.8 billion in service contracts during the quarter, ahead of most analysts' estimate of $11.5 billion. "Our outstanding services results this quarter enabled us to stay on track toward our objective of accelerated earnings per share growth through 2010, while we work through a transition in our hardware business," said Chief Executive Sam Palmisano in a statement. Factoring out currency exchange effects, revenue rose 3%. Software sales also grew 3% in constant currency terms, while hardware sales fell 13%. In a conference call after the results were announced, Chief Financial Officer Mark Loughridge said the company is working through an awkward period in which customers are putting off hardware purchases as they await IBM's new servers with improved processors, and work through existing processing capacity.