The company said it made $2.07 a share on revenue of $20.4 billion, down 6%, for the fourth quarter.
IBM had been expected to report income of $1.81 a share, on sales of $20.7 billion, based on a FactSet survey of 12 analysts.
In the same period a year ago the company posted earnings of $4.71 a share on sales of $21.8 billion. It reported net income of $1.7 billion.
IBM Chairman and CEO Arvind Krishna said in a statement that the company anticipates boosting sales this year. "We made progress in 2020 growing our hybrid cloud platform as the foundation for our clients digital transformations while dealing with the broader uncertainty of the macro environment," Krishna said in the statement. "The actions we are taking to focus on hybrid cloud and AI will take hold, giving us confidence we can achieve revenue growth in 2021."
The company offered no specific numbers, saying only that it "expects to grow revenue for the full year 2021 based on the current foreign exchange rates."
For the year, analysts project revenue of $73.9 billion.
IBM forecasted adjusted free cash flow of $11 billion to $12 billion in 2021, excluding approximately $3 billion of cash impacts from the company's structural actions initiated in the fourth quarter of 2020 and costs associated with the separation of its managed infrastructure services business, according to the statement.
IBM shares had risen about 4% since the company last reported earnings on Oct. 19.
Shares of IBM fell $8.40, or 6.7% to $123.40 in after-hours trading.