International Business Machines Corp., the largest computer-services company, reported third-quarter earnings that beat analysts' estimates and reiterated its annual forecast. The shares advanced 6 percent.

Earnings last quarter rose to $2.05 a share, excluding some items, Armonk, New York-based IBM said today in a statement. Analysts estimated profit of $2.01 a share, according to a Bloomberg survey. Revenue climbed 5 percent to $25.3 billion.

The report may assuage concern that the financial crisis is curbing earnings at IBM, whose shares have dropped 12 percent this week. The company, which is scheduled to announce full results on Oct. 16, said its product range and investments in emerging markets give it an advantage during the economic slump.

``It's nice to have some positive news in the tech space,'' said Chuck Jones, an analyst at Atlantic Trust Private Wealth Management in San Francisco, which has $16 billion under management, including IBM shares. ``They came through with good gross margins.''

Profit for the year will be at least $8.75 a share, IBM said, reiterating a previous forecast. The company, which made about 63 percent of its sales from outside the U.S. last year, said in September that third-quarter revenue growth in Europe, the Middle East and Africa was ``consistent'' with the first half.

``With the market conditions the way they are, we felt it was important to get our results out as soon as possible,'' said IBM spokesman Ian Colley.

Shares Gain

IBM rose $5.45 to $96 in extended trading after closing at $90.55 on the New York Stock Exchange. The shares have dropped 16 percent this year.

Earnings season kicks off for technology companies next week, with reports from Intel Corp., the world's largest chipmaker, and Google Inc., the most popular Internet search engine. The Standard & Poor's Information Technology Index has fallen 17 percent this month on speculation that a deteriorating global economy is reducing sales and profit growth.

IBM's results demonstrate that the company has a ``competitive edge in good times and tough times,'' Chief Executive Officer Samuel Palmisano said in the statement. ``We remain confident in our full-year outlook.''

Profit Margin

Third-quarter net income rose 20 percent to $2.8 billion, IBM said. Gross margin widened to 43.3 percent from 41.3 percent a year ago. The revenue increase of 5 percent included 3 percentage points of currency benefit, IBM said. Analysts had predicted sales of $26.5 billion, according to the Bloomberg survey.

``The revenue growth was a little light,'' Atlantic Trust's Jones said. ``They could have added at least one if not a couple more points of revenue growth in a normal environment.''

IBM's stock has fallen on investor concern that the failure of financial-services companies such as Lehman Brothers Holdings Inc. and Washington Mutual Inc. would eat into profit. Ben Reitzes, an analyst at Barclays Capital in New York, cut his rating on the stock yesterday to ``equal-weight'' from ``overweight,'' citing risks from a weakening economy.

About 28 percent of IBM's sales come from financial-services companies, Reitzes said in a report last week.

Toni Sacconaghi, an analyst at Sanford C. Bernstein, said last week that the increased risk of customers failing to pay their bills could hurt IBM's profit. If the company's provision for bad debt increases to a level similar to what it was after the dot-com bust, that could reduce annual earnings by between 22 cents and 28 cents a share, he said.

Source:Bloomberg