IBM beats forecast with nine per cent sales growth

Second quarter figures show 12 per cent increase in profit

IBM has improved on its results from last year

IBM's financial results for the second quarter of 2007 have exceeded expectations, with a net income up 12 per cent to $2.26bn, equivalent to $1.55 per share.

IBM achieved sales of $23.8bn – a rise of just under nine per cent from $21.89bn last year.

After a disappointing first quarter, analyst Thomson Financial had predicted earnings per share of $1.50, based on an estimated $21.07bn in revenue.

The IT giant reported that software sales proved to be the most profitable area of business, with sales climbing 13 per cent to $4.8bn.

'Our overall results again demonstrate the strength of our business model and our ability to achieve profitable growth and strong cash generation,' said IBM chief executive Samuel Palmisano.

IBM signed $11.7bn worth of new service contracts in the second quarter, up 22 per cent on the same period in 2006.