Technology giant IBM last night reported a 12% in quarterly profit and raised its 2007 earnings forecast as revenue surged due to software company acquisitions.

After the strong results, IBM increased its forecast for earnings per share growth in 2007 to 14-15% from a previous forecast of 13-14%, as it benefits from software acquisitions and improved profitability in its services division, its largest business.

Revenue growth of 8.6%, the strongest since 2001, was fuelled by more than $5 billion of acquisitions of software companies in the past year.

About half of the software division's second-quarter revenue growth of 13%, to $4.8 billion, came from recent purchases, IBM said.

Second-quarter net profits advanced to $2.26 billion, or $1.55 per share, from $2.02 billion a year earlier. Revenue rose to $23.8 billion from $21.9 billion.

US revenue grew 6%, reversing a slowdown in the first quarter. Revenue in Europe, the Middle East and Africa rose 13% and Asia-Pacific revenue was up 10%.