Edward Jones analyst Josh Olson said it was a disappointing quarter from a revenue standpoint.
"I think that the hardware business is going to be something they need to work through and growth markets are down much more than expected," he said.
IBM Chief Executive Virginia Rometty said in a statement the company "continued to expand operating margins and increased earnings per share, but fell short on revenue" and vowed to work to improve those parts of the hardware division and in emerging markets that were lagging.
Half the decline in emerging markets was in China, the company said.
Olson added that the services backlog was healthy, but "we are not seeing the conversion of that backlog into meaningful revenue."
IBM reiterated its full year 2013 outlook of non-GAAP earnings of at least $16.25 per share; analysts currently expect $16.89 a share.
— Reuters contributed to this article.