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IBM Shares Slide as Revenue Trails Estimates (Update1)

(Adds conference call comments from IBM CFO Mark Loughridge and updates share price.)

ARMONK, N.Y. ( TheStreet) -- IBM (IBM - Get Report) shares slumped in extended trading after the tech giant missed Wall Street's first-quarter revenue forecast.

Big Blue brought in revenue of $24.67 billion and earnings of $2.78 a share, compared with $24.6 billion and $2.41 in the same period last year. Analysts surveyed by Thomson Reuters expected IBM to report revenue of $24.77 billion and earnings of $2.65 a share.

IBM reported its first-quarter results after market close on Tuesday.

IBM shares slid on the results. The company's stock fell $4.96, or 2.4%, to $202.49 in extended trading.

The bellwether, which often sets the tone for tech earnings season, saw its software revenue increase 5%, or 7% adjusted for the effects of currency.

"We continued our strong performance in software as we aggressively pursue opportunities in analytics, cloud and Smarter Planet," said IBM CFO Mark Loughridge during the company's first-quarter conference call.

Loughridge added that IBM's key middleware product, WebSphere, grew 16% during the quarter and gained share for the 14th consecutive quarter.

Hardware sales, however, were much less robust. Revenue from IBM's Systems and Technology group was down 7%, or 6% adjusted for the effects of currency.

Speaking during the conference call, Loughridge explained that IBM's storage hardware revenue was down 4% during the first quarter. "The value continues to shift to software," he added.

IBM's services revenue was up only 1%.

The company's revenue from business analytics operations across services, software and hardware rose 14%. Loughridge, in particular, highlighted double-digit growth in IBM's Cognos business intelligence product. IBM, he added, also expanded the customer footprint for its Netezza data warehouse appliances.

The hardware and software company raised its earnings estimate for fiscal 2012 from $14.85 to at least $15.

"In the first quarter, we drove strong profit and earnings per share growth. We delivered another excellent software performance, expanded services margins, and continued the momentum in our growth initiatives," said Ginni Rometty, IBM's CEO, in a statement. "Our investments in growth-market countries continued to generate strong revenue growth across software, hardware and services while contributing to the company's ongoing margin expansion."

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.

>To submit a news tip, send an email to: tips@thestreet.com.

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