IBM has announced larger than expected earnings for the third quarter of the year and has said it is confident that it will meet its annual targets.

In its quarterly earnings statement the company announced that third-quarter 2008 diluted earnings were up 22 per cent with net income of $2.8bn (£1.6bn), a 20 per cent increase. Overall revenue rose by five per cent.

"Our results demonstrate that the combination of a steady base of recurring revenue and profits, investments for growth in emerging markets, a range of products and services that deliver value to clients, and a strong and flexible financial foundation give IBM a competitive edge in good times and tough times, " said IBM chairman Samuel J. Palmisano. "We remain confident in our full-year outlook."

IBM shares rose as a result of the announcement, which will help allay concerns that the technology sector will be hit by reduced orders as markets melt down around the world.

SAP, Nokia and others have all warned that growth rates will be cut by the financial crisis and technology stocks have taken a hammering around the world.