RESEARCH TRIANGLE PARK, N.C. – IBM (NYSE: IBM) took a $500 million hit due to changes in currency values but still beat Wall Street expectations for profit in the second quarter.

After the markets closed Monday, IBM said it earned $2.61 per share, up 29 cents or 13 percent from a year ago.

Net revenues increased to $3.4 billion from $3.1 billion and total revenues climbed to $23.7 billion, up 2 percent after the currency adjustment, IBM said.

Analysts polled by Thomson Reuters believe IBM will report more revenues and higher earnings than Q2 for 2009 with revenues up nearly $1 billion to $24.2 billion and earnings climbing to $2.58 from $2.32 per share.

IBM shares closed Monday at $129.79, up $1.76 or 1.4 percent.

Still, shares of IBM fell $4.73, or 3.6 percent, to $125.06 in extended trading Monday as revenue fell short of analyst expectations.

IBM said many analysts didn’t account for those currency changes in their forecasts.

“In the second quarter we again delivered double-digit earnings-per-share growth, increased margins, as well as improving constant-currency revenue performance in our ongoing software, services and hardware businesses, and in all geographies,” said Samuel Palmisano, IBM’s chairman, president and chief executive officer, in a statement.

The company also reported a 12 percent decline in the value of services contracts signed during the quarter, to $12.3 billion.

Investors are nursing fresh worries about the economy amid signs of sluggishness in the U.S. economy’s improvement and fears about the euro and the ability of the governments of Greece, Portugal and Spain figure to repay perilously high debts.

IBM gets most of its revenue from outside the U.S., so strength in the dollar has hurt the company, since deals done in other currencies have translated into fewer greenbacks.

The economic worries have influenced Wall Street’s reaction to the latest numbers from other technology heavyweights.

Last week Intel Corp. delivered its strongest quarter in the company’s four-decade history, helped by surging demand for microprocessors for computer servers. The shares have barely budged.

Google Inc.’s results leaped on momentum in Internet search advertising, and the company’s hiring has accelerated. Google’s stock has fallen, in part because of concerns about the weaker euro’s effect on Google and the costs connected with hiring new workers.

For the full financial report,

Big Blue stressed the following highlights:

  • Pre-tax income of $4.6 billion, up 7 percent;
  • Pre-tax margin of 19.3 percent, up 1 point;
  • Revenue of $23.7 billion, up 2 percent, as reported and adjusting for currency;
  • Growth markets revenue up 14 percent; first-half revenue as large as total Euro zone revenue;
  • BRIC [Brazil, Russia, India, China] countries revenue up 22 percent;
  • Business Analytics revenue up 14 percent;
  • Software revenue up 2 percent, 6 percent excluding divested PLM operations;
  • Systems and Technology revenue up 3 percent;
  • Services revenue up 2 percent;
  • Services backlog of $129 billion, up $1 billion, adjusting for currency.

IBM also raised its 2010 net income guidance to at least $11.25 per share. That represents an increase of a nickel per share over the previous guidance and reflects IBM’s confidence in its ability to squeeze more profit out of its workhorse technology services and software divisions.

IBM’s shares have range from a low of $113.16 to a high of $134.25 over the past 52 weeks.

“We expect the company to post another good quarter with year-over-year growth in revenue, margins and profitability,” Zacks reported in its earnings preview. “The Zacks Consensus Estimate for the quarter is pegged at $2.57 per share, which represents growth of 10.8% from $2.32 reported in the year-ago quarter.”

Analyst Amit Daryanani at RBC Capital Markets, however, said he expects a “likely subdued” quarter, according to MarketWatch.

IBM reported a strong first quarter.

IBM employs some 10,000 people in the Triangle area.

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