IBM, the world's biggest seller of computing equipment and services, reported Monday that earnings from continuing operations, which exclude results from the hard-drive business it exited last year, increased 8% year over year in the first quarter ended March 31, from 73 cents per share, or $1.3 billion in income, to 79 cents per share, or $1.4 billion in income. Revenue from continuing operations increased 11% over the same period--from $18 billion to $20.1 billion.

IBM expects to meet Wall Street profit and revenue estimates of $4.32 a share for 2003, CFO John Joyce said during a conference call after the results were announced.

In a statement, IBM chairman and CEO Sam Palmisano said a number of broad-reaching services deals that IBM struck lately with large enterprise customers--including Canada Life, BellSouth, and Visteon--helped boost the numbers. "IBM Global Services delivered another good quarter," said Palmisano, noting that the group booked $12 billion in contract signings during the period, its second-best performance ever during a first quarter.

The numbers indicate that that the slumping services market may be picking up. Earlier in the day, Accenture also said that it had recorded its second-best ever performance in a single quarter.

Overall, revenue from IBM's Global Services group jumped 24%, to $10.2 billion. The number includes business booked by PricewaterhouseCoopers Consulting after it was acquired by IBM last year.

IBM said revenue from software sales rose 8%, to $3.1 billion, compared with the first quarter of 2002. Within the group, IBM's sales of its WebSphere and DB2 middleware products increased 9%. On the downside, hardware sales fell 1%, to $5.8 billion, though IBM says sales of its Intel-based eServers increased.

IBM's healthy results amid a generally weak environment for technology spending surprised some analysts. "We thought we'd see more softness," says Technology Business Research analyst Bob Sutherland, "but they held the line."