IBM posts a good quarter, remains on track for the year

IBM's second quarter earnings were better than expected, but the company took a hit on currency fluctuations that led to lower-than-expected sales.

The software, services and integrated hardware giant reported second quarter earnings of $3.9 billion, or $3.34 a share, on revenue of $25.8 billion, down 3 percent from a year ago. Currency shaved about $1 billion from IBM's revenue. Non-GAAP earnings were $3.51 a share.

Wall Street was expecting IBM to report second quarter earnings of $3.42 a share on revenue of $26.27 billion.

As for the outlook, IBM said it is on track for delivering operating earnings of at least $15.10 a share for 2012.

In a nutshell, IBM is hitting earnings targets with solid expense management, but the currency fluctuations are hampering revenue growth. Companies with sales in the U.S. dollar show more growth when the greenback is weak.

Aside from cloud, analytics and smarter planet revenue, IBM delivered sluggish to lower sales growth. In a statement, IBM CEO Ginni Rometty said the company was upbeat about "strength in our growth initiatives and investments in higher value opportunities."

On a conference call with analysts, IBM CFO Mark Loughridge made the following points:

• Loughridge also talked up competitive server wins. He said:

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