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Local Tech Wire, AP

RESEARCH TRIANGLE PARK, N.C. – (NYSE: IBM) eked past Wall Street estimates for revenue and topped profit expectations by 4 cents a share in the first quarter.

The world’s largest technology and services firm reported revenues of $22.9 billion for the opening three months of the year. Analysts polled by Thomson Reuters had expected $22.8 billion.

IBM’s profits rose to $2.6 billion, or $1.97 per share, 4 cents higher than expectations.

A year ago, IBM reported $1.70 per share profit on revenues of $21.7 billion.

However, in after-hours trading immediately following the earnings announcement, IBM shares lost more than $2.

“In the first quarter, we drove significantly improved revenue growth rates from the fourth quarter across our businesses and geographies,” said IBM Chairman and Chief Executive Officer Sam Palmisano in a statement.

“We had strong results in strategic investment areas including growth markets, business analytics and Smarter Planet solutions.

“Looking ahead, we are confident in our ability to grow revenue, and given our mix of higher-value business and productivity we will expand margins, grow profit, cash and EPS, and increase returns to shareholders,” he added. “Thus, we expect full-year 2010 diluted earnings per share of at least $11.20.”

The improvement came not just from cost cutting, which IBM relied on much of last year to raise profits. In the most recent quarter, revenue climbed 5 percent, a bigger jump than what the company had in the last three months of 2009, when revenue grew just under 1 percent from the year before.

IBM, which employs some 10,000 people in the Triangle, said it expects continued revenue growth in the current quarter, even without accounting for weakness in the dollar that boosted the first-quarter numbers. IBM increased its 2010 earnings per share forecast to $11.20. Analysts were expecting $11.12.

The upbeat news could reflect the fact that more businesses are spending again on technology such as computer servers and software after clamping down during the recession. Intel Corp., the world’s biggest chip maker, said last week that its first-quarter income nearly quadrupled.

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IBM closed at $132.23 Monday, up $1.60. Its 52-week high is $134.25.

Highlights as noted by IBM:

• Diluted earnings per share of $1.97, up 16 percent;
• Revenue of $22.9 billion, up 5 percent, flat adjusting for currency;
• Net income of $2.6 billion, up 13 percent;
• Pre-tax income of $3.5 billion, up 13 percent;
• Pre-tax margin of 15.4 percent, up 1 point;
• Gross profit margin of 43.6 percent, up 0.2 point;
• Free cash flow of $1.4 billion, up approximately $400 million;
• Software revenue up 11 percent;
• Systems and Technology revenue up 5 percent;
• Services revenue up 4 percent;
• Services signings of $12.3 billion, down 2 percent;
• Consulting services signings up 18 percent;
• Strategic Outsourcing signings up 6 percent;
• Services backlog of $134 billion, up $8 billion year to year;
• Full-year 2010 earnings-per-share expectations raised to at least $11.20.