SAN FRANCISCO (AP) -- IBM Corp.'s third-quarter profit jumped nearly 20 percent, surpassing analyst estimates, as the technology company overcame slumping hardware sales and signed a healthy number of new services contracts.

Armonk, N.Y.-based IBM had released partial results for the July-September period last week to try to reassure investors who had been driving down the company's stock price. The move helped stop a steeper decline, but Wall Street was still waiting for word about how much new business IBM brought in during the period.

In a closely watched indicator, IBM signed $12.7 billion in new services contracts in the quarter, down 4 percent, which still showed it was able to lock in lots of new business despite the tough economic times. Short-term contract signings were up 13 percent to $6.1 billion.

IBM gets about half its revenue from annuity-like payments flowing from contracts it may have inked months or years ago for services like consulting or technology outsourcing.

Profit came in two cents per share ahead of analysts' recently revised estimates.

IBM earned $2.82 billion, or $2.05 per share, in the three months ended Sept. 30. That compares with net income of $2.36 billion, or $1.68 per share, in the year-ago period.

Analysts surveyed by Thomson Reuters were expecting $2.03 per share.

IBM continues to get better at wringing out more costs to improve its profit margins. Gross profit margin,

NEW YORK (AP) -- Citigroup Inc., suffering its fourth straight quarterly loss and forfeiting the title of largest U.S. bank by assets, is falling behind in the historic reshuffling of the U.S. banking system.

Of the four major U.S. banks left standing -- Citigroup, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. -- Citi has been on the shakiest footing for a while. Its peers have managed to keep turning profits, albeit dampened ones, and they've made acquisitions while Citi has shrunk.

Many observers believe now is the time for banking companies to snap up low-priced rivals to better position themselves in advance of an eventual economic turnaround.

But Thursday's results heightened concerns that Citi -- drubbed by the relentless downturn in housing and turmoil in the financial markets -- may not be the capable acquirer it hopes to be.

"I personally don't think they can do it (an acquisition) unless it's really on the cheap," said Donn Vickrey, co-founder of Gradient Analytics, pointing to Citi's recent losses and losses that appear to be in the pipeline. "To me, this looks pretty concerning."

The New York-based bank said Thursday it lost $2.8 billion, or 60 cents per share, in the third quarter, compared with a profit of $2.2 billion, or 44 cents per share, a year ago. The deficit for the July-to-September period brings Citi's total losses over the past 12 months to $20.2 billion.

The shortfall for the quarter was narrower than anticipated. Analysts polled by Thomson Reuters expected a loss of 70 cents per share; Standard & Poor's Ratings Services called the results

SAN FRANCISCO (AP) -- Google Inc. shook off the economic turbulence to deliver a third-quarter profit that topped analysts' forecasts, supporting the Internet search leader's theory that its advertising system will prosper even in tough times.

The reassuring performance lifted Google shares by more than 10 percent late Thursday, even though the company's executives made some of their most sober remarks yet about the worst financial crisis since the stock market crashed in 1929.

It's been bad enough to prompt Google -- renowned for its free-spending ways -- to hunker down and start scrimping more than it has in the past because the economy has entered "uncharted territory," Chairman Eric Schmidt told analysts in a conference call.

Google navigated through the economic shoals in the third quarter, earning $1.35 billion, or $4.24 per share. The profit rose 26 percent from $1.07 billion, or $3.38 per share, at the same time last year.

Excluding costs for employee stock compensation, Google said it would have made $4.92 per share. That figure surpassed the average estimate of $4.75 per share among analysts polled by Thomson Reuters.

Revenue climbed 31 percent to $5.54 billion. After subtracting advertising commissions, Google's revenue totaled $4.04 billion -- about $20 million below analyst estimates.

Analysts had been decreasing their projections amid waves of investor pessimism that pounded Google's stock price to a three-year low of $309.44 earlier Thursday. The shares subsequently rebounded with the