IBM's Irish technology campus, at Mulhuddart in West Dublin

IBM, the mainly technology services company, said Thursday that it raised its full-year outlook and reported higher-than-expected quarterly profit - - up 14% - - as it benefited from higher-margin software and services businesses at a time when technology spending remained weak.

The company said it expected full-year earnings of at least $9.85 a share, up from its previous outlook of at least $9.70 a share.

Third-quarter net income was $3.2 billion compared with $2.8 billion in the third quarter of 2008, an increase of 14%. Total revenues for the third quarter of 2009 of $23.6 billion increased 1% from the second quarter of 2009, and decreased 7% (5% adjusting for currency) from the third quarter of 2008.

“Our long-term strategic shift to higher-value businesses again enabled us to deliver outstanding margin, earnings and cash flow growth in the third quarter,” said Sam. Palmisano, IBM chairman, president and chief executive officer. “We also saw improved revenue trends in our business and share gains in software and hardware.

“We continued to invest for growth in areas where clients see potential for value creation including Smarter Planet solutions, cloud computing and advanced business analytics. We are optimistic about 2009 as we again raise our full-year expectations and we remain well ahead of pace for our 2010 roadmap of $10 to $11 per share.”

Chief financial officer Mark Loughridge said that in the fourth quarter it expects to report a revenue increase for the first time since July 2008. However, much of this increase may result from the weakening dollar, which raises international revenue.

IBM was boosted by demand in emerging economies and reported contracts for rail systems in China, wireless phone systems in India and a water utility in Malta.

The biggest revenue decline was in in hardware. Sales of  big mainframes fell 26% from last year.

Results detail