International Business Machines reported first-quarter revenue that beat analysts' estimates on Monday US time, but Big Blue's worst revenue in 14 years sent its shares down nearly 5 percent in extended trading.
The company's revenue fell 4.6 percent to US$18.68 billion in the first quarter ended 31 March, 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.
Revenue from "strategic imperatives", which includes cloud and mobile computing, data analytics, social and security software, rose about 14 percent in the first quarter.
That growth was offset by revenue from the company's services and hardware segments which 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 also received a US$1 billion refund in the quarter that lowered its effective tax rate to a negative 95.1 percent compared to 19.5 percent last year.
The company also maintained its full-year adjusted earnings guidance of at least US$13.50 per share.
Up to Monday US time's close, IBM's shares had risen 10.83 percent this year, compared with the 2.46 percent gain in the S&P 500 index .SPX.
(Reporting by Narottam Medhora in Bengaluru; Editing by Sriraj Kalluvila, Bernard Orr)