IBM surprised investors yesterday with a strong earnings report, a sign of both economic growth and the end of the company's troubling internal problems.

IBM, one of the first bellwether companies to release second-quarter earnings, reported revenue of $22.3 billion. That's well above the $21.9 billion Wall Street analysts had expected.

The strong numbers were a relief. IBM's first quarter had been a disappointment because the company had trouble closing deals, especially in its consulting division. That sparked fears of an industrywide slowdown. IBM is a good indicator of demand for technology products because it is the world's largest tech firm.

Instead, the slowdown appeared to be just IBM's problem. With yesterday's results, business is picking up.

"There were a lot of strengths," says IBM CFO Mark Loughridge. Consulting and software were particularly strong. Loughridge says that IBM's growth did not just come from deals it should have signed in the first quarter.

IBM shares were up 4.4 percent in after-hours trading on the news, released after markets closed.

Shares of Microsoft, Intel, Hewlett-Packard and other tech giants also rose after hours. Intel is scheduled to report results today.

"The global economy continues to expand at a moderate pace," Loughridge says, though he notes that "growth in Western Europe continues to lag."

IBM's net income of $1.8 billion, or $1.12 a share, rose from $1.7 billion, or $1.01 a share, a year ago.

Cost cutting helped, says equity analyst Richard Petersen at Pacific Crest Securities. "It does appear they're executing better," he says.

The second-quarter numbers include several one-time events: