IBM second-quarter profit rose 12% but sales fell and the outlook remains cautious.

IBM has benefitted from cost cutting but the tech giant had a 26% decline in hardware revenue compared with a year ago.

"This is still a tough economic environment," said Mark Loughridge, IBM's chief financial officer, on a conference call. "Moving forward there will still be budget pressure on customers but we think as stimulus [money] starts to roll out, [there] is a real opportunity for us."

IBM's revenue fall of 13%, was due in part to the strength of the dollar and would have been down 7% without currency fluctuations.

"As a result of our strategic transformation, we have a very strong business model that is delivering superior earnings, cash and client value,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer.

"We have continued our strategic investments in Smarter Planet solutions, business analytics and next generation data centers. As a result we are optimistic about how IBM is positioned to make the most of current growth opportunities as well as those that emerge as the economy recovers. We are well ahead of pace for our 2010 roadmap of $10 to $11 per share."

From a geographic perspective, the Americas’ second-quarter revenues were $9.9 billion, a decrease of 9% (7% adjusting for currency) from the 2008 period. Revenues from Europe/Middle East/Africa were $7.9 billion, down 20% (7% adjusting for currency). Asia-Pacific revenues decreased 7% (5% adjusting for currency) to $4.9 billion.

Results detail