It posted first quarter net earnings of $1.5bn, a 50% jump over the same period last year.

Earnings per share came to $1.55, easily beating expectations of $1.41 and compared with $1.06 dollars in the first three months of 1998. Revenues rose 15.3% to $20.317bn.

Arthur Hogan, Chief Markets' Analyst at Jefferies and Co said: "It's clearly good news for the market and IBM. They have always been a market leader and have seen a lot of selling in the last two weeks, but this could help turn it around."

Alan Skrainka, chief market strategist at Edward Jones said: "It's very encouraging news for the technology sector."

Results lift Dow

The results came after the close of trade on Wall Street but excitement beforehand about the IBM figures helped to push the Dow Jones' index of leading American companies to a new record closing mark.

A late-session rally lifted the Dow up 132.87 points to 10581.42, beating its record closing high set on Friday of 10493.89.