ARMONK, N.Y. (AP) -- IBM said Wednesday that its second-quarter net income fell 17 percent as revenue slipped and it absorbed the cost of layoffs.

Net income came to $3.23 billion, or $2.91 per share, down from $3.88 billion, or $3.34 per share, a year earlier.

Excluding a $1 billion charge related to layoffs, IBM's adjusted earnings came to $3.91 per share. That beat the $3.77 per share expected by analysts polled by FactSet, and IBM shares rose in after-hours trading.

Revenue fell 3 percent to $24.92 billion, mainly due to declines in services and hardware sales. Software revenue grew. The figure was still below the $25.35 billion expected by analysts.

Andrew Bartels, an analyst with research firm Forrester, said the shifts among categories were a net positive for IBM.

"Their strategic focus on software is paying off," Bartels said. "Because that software growth has the best profit margins."

The Armonk, N.Y., company also raised its annual profit outlook. It now expects to earn an adjusted $16.90 per share for the full year, above the $16.66 analysts expected.

Chief Financial Officer Mark Loughridge said the workforce restructuring would begin to show benefits in the third quarter and more fully in the fourth quarter.

He said the company was on track to post operating earnings of $20 per share in 2015 and return $70 billion to shareholders in the five-year period ending in 2015.


Advertisement

IBM shares rose $5.05, or 2.6 percent, to $199.60 in after-hours trading. They closed up 70 cents at $194.55 in the regular session.