IT giant IBM has reported a 13% slide in revenue as corporate spending fell, but cost cuts and a shift to more profitable businesses helped its profits to beat expectations, while the company raised its profit outlook for the full year.

IBM said it now expected 2009 earnings of at least $9.70 per share, up from its previous outlook of $9.20. Analysts said the higher outlook took the disappointment out of lower than expected second-quarter revenue, which fell to $23.3 billion from $26.8 billion a year earlier.

Net profit for the quarter rose to $3.1 billion from $2.8 billion a year earlier. Profit per share rose to $2.32 from $1.97, much higher than the average Wall Street forecast of $2.01.

IBM has fared better than many other technology companies amid the economic downturn, helped by its growing focus on profitable software and services like outsourcing and technology support, rather than increasingly commoditised hardware.

The upbeat results added to the market's optimism about the tech sector following leading chip maker Intel's stronger than expected earnings and outlook announcement this week. Intel had said that while it was feeling the effects of a recession and slowdown in IT spending, the industry was returning to seasonal business patterns.