Updated from 5:27 p.m. EDT

Investors searching for signs of a tech turnaround will have to wait a little longer, judging by results from one of the world's biggest computer hardware and software distributors. Tech Data ( TECD) today released first quarter results showing sales stayed flat with last year, while earnings fell 37%. Though the company said revenues may climb slightly in the second quarter, its earnings guidance fell short of what Wall Street wants.

After hours, shares dropped $1 or 3.9% to $25.

The quarter "was pretty much what I was expecting, though revenues were a little better than I expected," says Lehman's Jon Horvath, whose own earnings model was below the consensus number. "I was expecting a little bit of weakness after these results and we're definitely going to have some weakness tomorrow when it opens. However, I think it's an opportunity for those not able to get in a week ago to get back into the stock," he says. Lehman hasn't done recent banking for Tech Data.

Last week Horvath upgraded the stock to equal weight, correctly betting the company would bring down guidance somewhat. Tech Data's valuation is low relative to large-cap computer hardware OEMs that have run up in the recent rally, he explains; its tangible book value rose in the most recent quarter, from $22.50 per share to $22.73.

In its April quarter Tech Data posted sales of $3.91 billion, about flat with last year's levels. Revenues came in above the Wall Street consensus forecast for $3.82 billion.

Net income totaled $21.5 million or 38 cents a share, down sharply from year-ago EPS of 60 cents. Earnings fell short of expectations by two cents.

Echoing a trend noted previously by rival Ingram Micro ( IM), Tech Data said sales in the Americas were soft, falling 14.5% compared to the prior year. European revenues helped to compensate; helped along by the weak dollar, they rose 17.9%. But holding currency flat, first quarter sales in Europe would have declined 4.3%.

"On the U.S. softness, I'd say the business I think finished respectably in Q4. In Q1 I think it was kind of slow out of the gate -- nothing terrible, but the quarter never really woke up," said CEO Steve Raymund on the conference call. "April was particularly soft as it usually is every year. Still we were surprised at the overall weakness."

"The European demand outlook I wouldn't characterize as particularly positive," he added. "There are probably more downside tendencies than up."

The first quarter's gross margin of 5.29% compared to 5.33% a year ago. H-P accounted for 35% of sales in the period, compared to 36% for the same quarter last year.

For the July quarter now underway, Tech Data forecast sales in the range of $3.9 billion to $4.05 billion, implying sequential growth of 0% to 3.5% and in line with consensus estimates of $3.91 billion.

However, the range given for earnings guidance falls well short of Wall Street's own expectations, at the low end. Tech Data is guiding for earnings of 34 cents to 38 cents, compared to the consensus estimate for 41 cents.

Tech Data's outlook follows on the bleak forecast issued last month by rival Ingram Micro. On April 29 Ingram, the world's biggest distributor of technology products, startled Wall Street by forecasting second quarter revenues would slide 9%. Analysts had been gearing for a mere 1% sequential decline.

In another sign the tech industry isn't betting on a turnaround soon, competing distributor Arrow Electronics ( ARW) said today it's cutting about 3% of its work force, or 400 jobs. The move is intended to save $25 million in annual operating expenses.