Revenue was US$23.6 billion for the company's third quarter, ended Sept. 30. That's down 7 percent year-over-year, but ahead of analyst expectations, according to those polled by Thomson Reuters. Analysts had expected revenue to be $23.4 billion, down 8 percent year-over-year, Thomson Reuters found.

IBM says it is operating as a more profitable company -- earnings per share were up 18 percent at $2.40 per share this quarter -- but revenue in the company's enterprise product lines was down, reflecting the conservative IT spending patterns that have gone hand-in-hand with the global recession.

Hardest hit was IBM's mainframe group, where revenue was down 26 percent. The company's Unix business was down 10 percent, and storage revenue dropped 13 percent. IBM's Intel-based System x servers were up 1 percent for the quarter.

IBM is planning major revisions to its Unix and mainframe product lines next year, said Mark Loughridge, IBM's chief financial officer, during an earnings conference call Thursday.

Things looked better with the company's Global Services and software lines of business. Global Services revenue dropped 7 percent, but the company continued to squeeze out profit-margin improvements there. With software, the drop was just 3 percent, most of which IBM attributed to fluctuations in international currency rates.