NEW YORK (AP) - IBM announced an 8 percent increase in second-quarter profits, saying its wide range of products and services helped it weather a troubled economy that hurt other technology companies.

However, its second-quarter revenue was shy of Wall Street's expectations, sending shares lower in after-hours trading. IBM also cautioned against the effects of the strong U.S. dollar, saying it was hurting its business overseas.

However, the computer giant remained positive about its second-quarter results.

``While others stumbled, we grew revenue, recorded record operational profits and, most importantly, increased our market share in almost every one of our strategic business categories,'' said IBM chairman Louis V. Gerstner in unveiling the results Wednesday.

The Armonk-based computer and technology company reported net income of $2.05 billion, or $1.15 per share, compared with $1.94 billion or $1.06 per share in the year-ago period. The results met the expectations of analysts surveyed by Thomson Financial/First Call.

However, IBM reported revenues of $21.57 billion, a 0.4 percent decline from the $21.65 billion in sales it took in the year-ago period. Analysts were expecting revenue of $22.5 billion.

Shares of IBM, were up 43 cents to $104.71 in trading Thursday on the New York Stock Exchange.

Bringing in most revenues was IBM's fast-growing Global Services division, which, with just over $8.7 billion in revenues - a 13 percent increase - has overtaken the previous revenue leader, the company's Hardware division.

IBM senior vice president John R. Joyce said during a company conference call that the services division was helped by several large contracts, especially in outsourcing contracts signed in Japan.

IBM was also helped by positive results from its server and middleware business.

On the negative side, IBM's personal computer business continued to slip, with revenues down by 14 percent, Joyce said.

In addition, the strong dollar has hurt the company's sales abroad by making its products and services more expensive, Joyce said; the company expects a 5 percent decline in sales in the third quarter and a 3-4 percent decline in the fourth quarter due to the U.S. currency.

``If the dollar continues to be strong, the year-to-year hit to our earnings in the second half will be 14 cents,'' said Joyce.

In the year's remaining two quarters, IBM also said it would be hurt by problems among buyers of its microelectronic components.

``Microelectronics will be a weakness in the third quarter,'' said Joyce. ``Our third quarter will be our toughest quarter but we should see an uptick in the fourth quarter.''

Write-downs in the value of IBM's equity investments may also shave another 5 cents per share in the second half of 2001.

Nevertheless, revenue growth for 2001 should continue in the ``high single-digits,'' said Joyce.

In 2002, Joyce said IBM's combination of hardware products and lucrative, long-term service contracts will keep the company ahead of competitors.

``The winners in our industry will deliver integrated services and hosted hardware and software,'' he said. ``Companies are looking for trusted partners to provide solutions, not just the piece parts.''

For the six months ended June 30, IBM earned $3.80 billion, or $2.13 per share, on revenue of $42.6 billion. In the year-ago period, IBM earned $3.46 billion, or $1.89 per share, on revenue of $41 billion.