UPDATE 2-IBM preliminary profit beats expectations

* Preliminary Q3 EPS $2.05 beats estimates of $2.01

* Affirms 2008 profit outlook despite financial crisis

* Stock up 6 pct in after-hours trading (Adds analyst comment, industry context)

NEW YORK, Oct 8 (Reuters) - IBM (IBM.N) posted a stronger-than-expected preliminary quarterly profit and stood by its full-year outlook, defying worries that the financial crisis would hurt demand for its computer products and services.

Shares of IBM rose 6 percent in after-market trade on the news on Wednesday, which came after technology shares have been hammered by fears that a global recession would crush corporate IT spending. European tech giant SAP AG (SAPG.DE) warned this week that it had seen a sudden drop-off in software sales in September.

"For companies to be reaffirming their outlook through the end of the year is h-u-g-e," said Mike Holland, chairman of investment company Holland & Co, who oversees assets in excess of $4 billion, including IBM.

"In this environment, the combination of meeting current expectations but also reaffirming their outlook is an incredible performance," he said. "You made my evening," he told Reuters after getting the news.

International Business Machines Corp said its third-quarter net income rose 20 percent to $2.8 billion. Earnings per share from continuing operations rose to $2.05, compared to $1.68 a year earlier.

Revenue rose 5 percent to $25.3 billion, including 3 points from currency benefits, IBM said.

Analysts were looking for earnings of $2.01 per share on revenue of $26.5 billion, according to Reuters Estimates.

"Our results demonstrate that the combination of a steady base of recurring revenue and profits, investments for growth in emerging markets, a range of products and services that deliver value to clients, and a strong and flexible financial foundation give IBM a competitive edge in good times and tough times," CEO Samuel Palmisano said in a statement. "We remain confident in our full-year outlook."

IBM affirmed its forecast that 2008 earnings per share would be at least $8.75, representing year-on-year growth of 22 percent.

IBM shares, which had fallen 5.33 percent to close at $90.55 on the New York Stock Exchange, rose to $96 in after-hours trading.

Shares of Dell (DELL.O) rose nearly 2 percent, while shares of Oracle (ORCL.O) and Microsoft (MSFT.O) rose about 1 percent. Other major technology companies such as Intel (INTC.O) and Hewlett-Packard Co were barely changed.