Updated from 4:40 p.m. EDT
Big Blue managed to beat analysts' estimates by a penny, with income of $1.6 billion, or 90 cents a share. The Armonk, N.Y., computer hardware maker earned $2 billion, or $1.08 a share, in the third quarter a year ago. Analysts expected the company to earn 89 cents a share in the quarter.
Sales for the quarter fell to $20.4 billion from $21.78 billion in the same period last year. Shares of IBM, a component of the Dow Jones Industrial Average, lost 15 cents, or 0.2%, to $101.85 in regular-session trading Tuesday.
During a conference call after the earnings release, IBM executives said the earnings estimate for the fourth quarter is "reasonable." Analysts are looking for income of $1.34 a share. The company also said the current business environment is challenging and added that the Sept. 11 terrorist attacks had hurt hardware sales. But IBM said its maintenance and outsourcing technology services had been largely unaffected and that high-end server and software sales remained strong.
In a separate story, TheStreet.com took a look at what IBM's results could mean for technology stocks.