International Business Machines Corp. (IBM) reported a better-than-expected 14% jump in third-quarter profit and raised its 2009 earnings outlook, but the tech giant indicated that corporate spending remains sluggish despite a stabilizing economy.

The Armonk, N.Y., tech titan said its signed services contracts, which indicates future business, fell 7% to $11.8 billion. It was the company's lowest total since the first quarter of 2008.

On the company's conference call, Chief Financial Officer Mark Loughridge said that while outsourcing is still strong, consulting remains weak, continuing a trend over the past few quarters. The numbers continue to suggest that companies are reluctant to spend money on nonessential tech services.

Loughridge, though, noted variations within the weak services signings. For example, the overall global business services division, which is the consulting part of the services business, fell 11% in the quarter. However, consulting and systems integration grew 20% in North America.

"Overall, the economic environment has stabilized," Loughridge said.

Despite beating the top- and bottom-line estimates for the third quarter, IBM shares - up 52% year to date - slid on the weak signings number, dropping 3.7% to $123.25 in late trading. Shares of Microsoft Corp. (MSFT), Hewlett-Packard Co. (HPQ) and Cisco Systems Inc. (CSCO) - tech giants that serve the business customer - all slipped less than 1% in after-hours trading along with IBM.

For the quarter ended Sept. 30, IBM reported earnings of $3.21 billion, or $2.40 a share, up from $2.82 billion, or $2.04 a share, a year earlier. Revenue declined 6.9% to $23.6 billion, two percentage points of which was due to currency changes.

Analysts polled by Thomson Reuters expected per-share earnings of $2.38 on revenue of $23.4 billion.

Gross margin jumped to 45.1% from 43.3%, led by improved margins in services and software.

IBM now sees 2009 earnings of at least $9.85 a share, up 15 cents from its previous estimate. Wall Street most recently expected per-share earnings of $9.78. IBM continued to see earnings "ahead of pace" for its 2010 outlook of $10 to $11 a share.

For the fourth quarter, Loughridge said the company expected to post revenue growth. The mean estimate of analysts surveyed by Thomson Reuters was a 1% drop to $26.79 billion. Chairman and Chief Executive Samuel J. Palmisano added that IBM saw improved revenue trends, while notching share gains in software and hardware.

The tech bellwether has benefited for years from its shift to a software and services business, and away from hardware. The move has helped the company's results hold up better than others during the recession.

Revenue in the Americas, IBM's biggest market, fell 5% - falling 4% excluding currency fluctuations. Sales in its Europe and Middle Eastern region declined 12% but were essentially flat in Asia.

Total global services revenue decreased 7%, as global technology services fell 4.4% to $9.4 billion, or 2% excluding currency fluctuations, while global business services dropped 11% to $4.3 billion. Revenue from the software segment were down 3%, or flat when adjusted for currency.

-By Jessica Hodgson, Dow Jones Newswires; 415-439-6455; jessica.hodgson@dowjones.com

(John Kell contributed to this article.)