I.B.M. Delivers Solid Quarterly Profit

I.B.M. delivered solid quarterly profits on Wednesday that easily surpassed Wall Street’s expectations, even though it reported weak revenue, which was pulled down by economic troubles in some markets, lower hardware sales and the impact of a strengthening dollar.

I.B.M. was sufficiently encouraged by the results to slightly lift its guidance for the full year to “at least $15.10 a share,” from $15 a share previously.

The quarterly result, said A. M. Sacconaghi, an analyst at Sanford C. Bernstein, pointed to “fortress I.B.M.,” a company whose profit performance seems all but impervious to industry cycles.

The company, Mr. Sacconaghi noted, has raised its full-year guidance in 12 of the last 14 quarters and met or beat Wall Street’s average earnings estimate for 29 consecutive quarters. “It’s boringly predictable,” he said. I.B.M. is the largest global supplier of information technology — hardware, software and services — to corporations and governments.

In a statement, Virginia Rometty, I.B.M.’s chief executive, said the strong profit performance reflected the success of the company’s “long-term business model.” That model combines focusing on higher-margin businesses and faster-growing markets abroad with aggressive cost-cutting. The strategy has served the company well, with earnings improving steadily throughout the recession and financial crisis.

But the second-quarter report was also the fourth straight quarter that I.B.M’s revenue has fallen below Wall Street’s estimates. “But revenue growth is the missing piece of the puzzle in the long term,” said Steven Milunovich, an analyst at UBS.

In after-hours trading, IBM shares rose $3.40 a share, nearly 2 percent, to $191.65 a share. In the regular session, the company’s stock price closed up $4.60 a share, at $188.25 a share.

The company reported a 6 percent increase in second-quarter net income to $3.9 billion. Its operating earnings per share rose 14 percent to $3.51, partly reflecting fewer shares because of buyback programs. The company has spent about $17 billion buying its own shares in the last year, Mark Loughridge, a chief financial officer, said in a conference call with analysts.

The profits per share were well above the average estimate of Wall Street analysts of $3.42, as compiled by Thomson Reuters.

I.B.M. reported revenue of $25.8 billion, down 3 percent from the year-ago quarter. That was about $500 million below analysts’ consensus estimate of $26.3 billion. Most of the company’s sales are overseas, so a stronger dollar cut revenue by about $1 billion in the quarter, Mr. Loughridge said.

Revenue was depressed by lower hardware sales, down 9 percent from the previous year when a new model of mainframe computers were selling briskly.

The slowing global economy has hurt other technology suppliers. Several companies have recently alerted investors to weaker-than-expected profits including Advanced Micro Devices, a chip maker; Seagate Technology, a disk drive manufacturer; and Infosys, an Indian supplier of outsourced services and software development.

The companies have cited a pullback in technology spending caused by a struggling American economy, Europe’s financial troubles and a slowdown in China.

Intel, the world’s largest chip maker, reported profit that outpaced Wall Street estimates, but sharply lowered its 2012 projections for sales growth.

I.B.M. has so far managed to avoid the cyclical swings in the technology business by winning business in fast-growing foreign markets like China, India and Brazil, and shifting more of its business to higher-profit software and services businesses. Those high-margin ventures typically build on the company’s investment in research and development.

I.B.M. has projects around the world to help cities and nations use computing and data-tracking to improve traffic management, energy use and policing.

Revenue from such projects — I.B.M.’s Smarter Planet initiative — increased more than 20 percent in the quarter.

Revenue from I.B.M.’s big services businesses fell slightly to $14.7 billion, but profit margins and income rose sharply. “We manage these businesses for profit and cash generation,” Mr. Loughridge said.