IBM is hoping its new ThinkPad will boost sales

IBM, or International Business Machines, said its earnings in the April to June quarter of the year rose thanks to cost cutting and acquisitions.

Apple meanwhile reported a 41% drop in profits, despite rising sales of its Macintosh computers, because of increased spending on - among other things - opening new stores in the US.

The maker of Macintosh computers said it expected revenue to rise in the second half of the year.

Praying for recovery

IBM said it had overcome a slump in corporate technology spending by reducing its overheads.

In the three months to June, its profit jumped to $1.7bn from $56m the year before.

IBM is praying for a global economy recovery that will raise the ships. Peter Kastner, IBM chief research officer

However, the year before figure included a charge of $1.4bn to cover job cuts and the cost of exiting money-losing businesses

The group said it "can and will" do better in the second half of the year.

But chief financial officer John Joyce warned: "It is a tough market out there."

The group said its services division had performed best, with revenues up 23% in the three months.

"Clearly, services is the champagne-popping part of the announcement," said Peter Kastner, IBM's chief research officer.

"The rest of the party was pretty glum.

"IBM is praying for a global economy recovery that will raise the ships," he added.

Beating forecasts

iPod sales have taken off

Apple credited strong sales of its PowerBook laptops and iPod portable music players for an increase in sales, which rose 8% in the three months to 28 June to $1.5bn.

But its profits fell to $19m or 5 cents per share, down from $32m or 9 cents per share the year before, as the cost of sales and general administration costs increased.

Nonetheless, results were well above analysts' forecasts of 3 cents per share, sending Apple shares up almost 40 cents to $20.25 in after hours trading.