IBM has disappointed investors by reporting a decline in new technology services contracts in the second quarter, while a weaker euro hit revenue more than expected.
While firm growth in the company's higher-margin software business and sales in emerging markets boosted profit, the results were not as good as investors had wanted to see from the world's biggest technology services company.
Some analysts said IBM's results may dampen expectations that companies' IT spending was on the rebound.
Net profit slightly exceeded expectations and rose to $3.4 billion, or $2.61 a share, from $3.1 billion, or $2.32 a share, a year earlier. Wall Street had forecast $2.58 a share.
IBM said its Q2 revenue rose 2% from a year earlier to $23.7 billion. The company blamed currency rates for reducing revenue by about $500m in the quarter.
But analysts were also concerned about the low signings of services deals, a key indicator of future revenue. Signed services contracts fell 12% to $12.3 billion, while total outsourcing services signings decreased 19% to $6.5 billion.
One of the strongest areas of revenue growth in the quarter was emerging markets, which showed a 14% gain.
