IBM reported quarterly earnings thatbeat analysts' expectations, but missed slightly on revenue, sending its shares lower in after-hours trading on Tuesday.
The information technology company delivered first-quarter earnings excluding items of $2.78 per share, up from $2.41 per share in the year-earlier period.
Revenue was $24.70 billion, an increase from $24.61 billion a year ago.
Analysts had expected the company to report earnings excluding items of $2.65 per share on revenue of $24.78 billion, according to Thomson Reuters.
First-quarter net income was $3.1 billion compared with $2.9 billion in the first quarter of 2011, an increase of 7 percent, according to a company statement.
IBM has been shifting its focus from hardware to higher-margin services and software over the past decade, and has just raised its full year outlook. They expect at least $15 in adjusted earnings per share, up from its previous forecast of $14.85.
Sterne Agee analyst Shaw Wu wrote in a recent note that there was a "fair likelihood" IBM would "modestly raise" its outlook.
The blue chip company is closely watched as an indicator of enterprise IT spending, and competes with business software makers Oracle and SAP AG as well as outsourcing company Accentureand computing giant Hewlett Packard .
After the announcement, shares of IBM fell in after-hours trading.(Click here for after-hours quote)