IBM reported its worst quarterly revenue in 14 years as results from newer businesses including cloud and mobile computing failed to offset declines in its traditional businesses, sending shares down nearly 5 percent in extended trading.
Revenue for the world's largest technology services company fell 4.6 percent to US$18.7 billion (A$24 billion) in the first quarter, but beat analysts' average estimate of US$18.3 billion.
It was the 16th straight quarter of revenue decline for IBM.
Under CEO Ginni Rometty, IBM has been moving toward areas such as cloud-based services, security software and data analytics, while trimming its traditional hardware business by exiting low-margin businesses.
However, revenue in the company's newer businesses is failing to make up for declines in its traditional segments.
Bernstein analyst Toni Sacconaghi, in a research note before the results, wrote that the falloff in IBM's traditional businesses was dwarfing the company's ability to capture new revenue.
Revenue from "strategic imperatives," which includes cloud and mobile computing, data analytics, social and security software, rose about 14 percent in the first quarter.
But revenue from the services and hardware segments fell 4.3 percent and 21.8 percent respectively in the quarter.
Excluding items, IBM earned US$2.35 per share, beating the average analyst estimate of US$2.09.
The company received a US$1 billion refund in the quarter that lowered its effective tax rate to a negative 95.1 percent compared with 19.5 percent last year.
The company maintained its full-year adjusted earnings guidance of at least US$13.50 per share. Analysts on average were expecting US$13.55, according to Thomson Reuters I/B/E/S.