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Wall Street failed to predict how well IBM would perform this quarter, with the tech giant posting an 18 percent increase in earnings per share from 2008. Earnings per share was $2.32 in Q2, compared to analyst estimates of $2.01.

Now, IBM is showing more optimism for the year as a whole. The company has adjusted its expectations for the year from $9.20 to $9.70 per share. That seems pretty good compared to last year’s total of $8.98 per share and would certainly put IBM on track for its goal of $10 or $11 per share in 2010.

Revenues are actually down 13 percent this quarter (or 7 percent adjusting for currency) to $23.3 billion, but net income increased 12 percent from the second quarter of 2008, to $3.1 billion. The only segment where IBM fared poorly was in systems and technology, which saw a 26 percent revenue decrease and a two-point loss in margins to 35.7 percent.

Software was the star, seeing a 0.8-point increase in margins, to 85.1 percent, on a 7 percent drop in revenue. IBM expects double-digit growth in software’s pre-tax income this year, potentially reaching $8 billion. The company also praised its Smarter Planet solutions — which provide improvements to the way utilities and other basic services are handled — along with its business analytics and next generation data centers.

According to 24/7 Wall Street, even “whisper figures” that were much higher than analyst estimates were lower than IBM’s earnings. The site called IBM’s Q2 performance a “walk-off home run.”

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