The industry's been in the doldrums

The company, which brought forward the release of its earnings, also forecast that demand will improve this year.

After three years of penny-pinching, IBM said companies are beginning to spend again, helping it to make up ground on more consumer-focused rivals.

The figures beat market expectations and pushed shares up in New York.

Outlook

Fourth-quarter profit jumped to $2.7bn (�1.5bn; 2.1bn euros) from $1bn a year earlier.

Sales also improved, climbing 9% to $25.9bn

What has impressed analysts was the number of new contracts IBM signed at the end of 2003. That bodes well for this year, they said.

In the fourth quarter, the value of new consulting and services contracts totalled $17.3bn, more than many market observers had predicted.

'Reasonable'

John Joyce, IBM's Chief Financial Officer, said that analysts' forecasts for this year are "reasonable".

In New York, IBM shares surged 4.5%, posting their biggest daily gain since September last year.

Technology stocks were among the best performers on Wall Street in 2003, with the Nasdaq share index climbing by over 40% during the course of the year.

Optimism about the performance of the industry got a boost this week as companies including Apple, Intel and Yahoo! all released trading statements.

While their shares dropped today, many analysts still are pointing to a sustainable, if unspectacular, recovery.

Sun Microsystems, a maker of servers that run computer networks and Websites, said late on Thursday that its second-quarter loss narrowed. The company has cut costs to win new clients.