Updated from 6:06 p.m. EDT

In an earnings report characterized by its steadfast cheerfulness,


(IBM) - Get Report

beat Wall Street's forecast on sales. But it came up slightly short on profit and likely unsettled some investors by declining to give guidance for the quarter now under way.

Big Blue on Monday reported first-quarter revenue of $20.1 billion, slightly above expectations of $19.85 billion. Sales grew 11% from last year's levels.

Net income totaled $1.38 billion, up 16% from $1.19 billion a year ago.

Diluted earnings per share from operations amounted to 79 cents, though, a penny below Wall Street expectations. IBM earned 68 cents per share in the year-ago period.

Though CFO John Joyce affirmed consensus earnings estimates for the year - currently $4.32, according to Thomson Financial/First Call -- he refused to explicitly back consensus numbers for the current quarter. "You shouldn't read anything into that," he said, referring to an analyst's question about how his vague comments should be interpreted. "We're going to let the analyst community decide exactly what

they think we can do."

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Leading up to the call, there were questions about whether IBM can manage to meet consensus estimates for the second quarter, which assume 7.5% sequential growth with profit growth of an even more robust 24%.

Still, investors seemed disinclined to punish the company, lifting the stock 38 cents or 0.5% in after-hours trading to $80.45.

Signings in IBM's global services arm amounted to $12.1 billion -- a steep slide from last quarter's unusually robust $18 billion, but well above the $8 billion in bookings for the same quarter last year.

Joyce characterized bookings as "strong, given the environment," and said signings could grow 15% to 20% in the second quarter. But he added that the second quarter "should be the toughest quarter" for IBM's semiconductor division, before its new 300 mm fab ramps up in the second half of the year.

In a strategic comment, Joyce said IBM is likely to continue directing some of its cash flow towards acquisitions in services and software. "This year, we will get the revenues benefit of our recent acquisitions," which have included PricewaterhouseCoopers and Rational Software, he said. "More importantly, in 2004, we will get the profit benefit of those acquisitions."

Analysts with estimates on the high side might tamp down their numbers a little in the wake of IBM's call, pushing some revenues and EPS into the second half of the year, noted Lehman's Dan Niles. But he doesn't plan to make any changes in his Q2 sales forecast, which remains below consensus at 6% growth. Lehman has done investment banking for IBM.

"We felt pretty good with what we came away with," said Niles of the IBM call. "Some of the commentary was somewhat encouraging in terms of the war stopping demand and then it turning back on again," he said. That bodes well for technology, given that IBM accounts for nearly a tenth of IT spending. Also, despite relatively weak spending, currency benefits and revenues from the Rational acquisition will provide IBM a cushion for the rest of the year, he says.

"If anything, it wasn't too long ago when some investors were worried IBM might miss top-line estimates, yet they actually beat by a little bit," said Robert Cihra, an analyst at Fulcrum Global Partners, who has a neutral rating on the stock. He wasn't surprised by the penny miss, which matched his own below-consensus estimate.

IBM's results offered fodder for both the bulls and bears on the stock, he said. "It wasn't the type of quarter that would dramatically change people's opinion one way or the other. If you were positive going in, it's likely you were still positive. If you were negative, you probably wouldn't change your mind."

Fulcrum doesn't do investment banking.