Excluding one-time items, the technology services company said it earned $2.05 a share on sales of $25.3 billion in the third quarter, against earnings of $1.68 a share on a topline of $24.119 billion last year.
Just last week, IBM said it earned $2.05 per share in the July-September period and that sales increased 5 percent to $25.3 billion. At the time, IBM's profit was 4 cents per share above Wall Street estimates, although sales were $1 billion below consensus.
In a closely watched indicator, IBM signed $12.7 billion in new services contracts in the quarter, down 4 percent, which still showed it was able to lock in lots of new business despite the tough economic times. Short-term contract signings were up 13 percent to $6.1 billion.
IBM gets about half its revenue from annuity-like payments flowing from contracts it may have inked months or years ago for services like consulting or technology outsourcing.
- Video: Dan Morgan, Synovus Securities discusses the results
Analysts adjusted their forecasts after IBM's pre-announcement to a profit of $2.03 a share on sales of $25.878 billion, according to a consensus compiled by Thomson Reuters.
Shares of IBM , which completed regular New York Stock Exchange trading up 3.66 percent at $91.52 on Thursday, edged more than 1.5 percent higher after market hours.
IBM's shares fell by more than 25 percent between the end of September and its 52-week low of $83.51 on Oct. 10. The stock has since rebounded off the worst of those declines.