The computer giant IBM suffered a near 19% fall in net profits during July, August and September as computer sales slumped.

Net profits fell from just under $2bn a year earlier to below $1.6bn while sales slipped 6% to $20.43bn.

"The third quarter saw an acceleration of the fundamental shift in customer buying behaviour that is altering our industry's landscape," chairman and chief executive Louis Gerstner said in a statement.

"Customers now allocate an increasing percentage of their spending to solutions, not boxes."

Earnings from PC sales and other hardware earnings fell during the third quarter, hit by tough price competition and weak markets.

But services and software earnings rose.

In after-hours trading, shares in the company gained $2.35 to $104.20. The stock slipped back 15 cents during the day's trading on New York Stock Exchange.