IBM ( IBM) had first-quarter sales that came in below Wall Street's consensus estimate, despite hopes that the tech bellwether would herald a turnaround in the sector.

The Armonk, N.Y.-based firm's revenue was impacted by the strong U.S. dollar, although the company reiterated its previous earnings guidance for 2009.

IBM reported first-quarter revenue of $21.7 billion, down 11% from the same period last year, or 4% adjusted for currency. Analysts had estimated revenue of $22.51 billion.

The company grew its earnings by 4%, however, and beat analysts' forecast. IBM posted earnings of $1.70 a share on net income of $2.3 billion, compared to $1.64 and $2.32 billion in the year-ago quarter and above the estimate of $1.66.

Shares of IBM slipped $2.61, or 2.5%, to $97.90 in after-market trading.

"IBM continued to perform well in a very difficult environment," said CEO Sam Palmisano, in a statement. The executive added that a shift from commodity businesses such as PCs into software and services have helped the firm withstand the worst of the recession.

The company still expects full-year earnings of at least $9.20 a share.

Despite its bullish outlook, IBM's total global services revenue slipped 10% compared to the prior year, or 2% adjusted for currency. Software sales fell 6% over the same period, or 2% taking into account currency fluctuations.

IBM is seen a great indicator for the overall health of the tech sector, although its software and services businesses have often helped it survive the vagaries of hardware spending.

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