NEW YORK (REUTERS) - International Business Machines Corp reported first-quarter revenue that beat analysts' estimates on Monday (April 18), but Big Blue's worst revenue in 14 years sent its shares down nearly 5 per cent in extended trading.
The company's revenue fell 4.6 per cent to US$18.68 billion in the first quarter ended March 31, but beat analysts' average estimate of US$18.29 billion.
IBM also posted its 16th straight quarter of revenue decline.
Under chief executive Ginni Rometty, IBM has been moving towards 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 ahead of 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 per cent in the first quarter.
That growth was offset by revenue from the company's services and hardware segments which fell 4.3 per cent and 21.8 per cent, respectively, in the quarter.
Excluding items, IBM earned US$2.35 per share, beating the average analyst estimate of US$2.09.
The company also received a US$1 billion refund in the quarter that lowered its effective tax rate to a negative 95.1 per cent compared to 19.5 per cent last year.
The company also maintained its full-year adjusted earnings guidance of at least US$13.50 per share.
Up to Monday's close, IBM's shares had risen 10.83 per cent this year, compared with the 2.46 per cent gain in the S&P 500 index.