IBM reported a profit of $3.23 billion, or $2.91 a share, down from $3.88 billion, or $3.34 a share, a year earlier. Operating earnings, which exclude retirement-plan costs, amortization and workforce reduction charges, were $3.91 a share.Revenue slipped 3.3% to $24.92 billion, or down 1% when adjusted for currency fluctuations.
Analysts most recently predicted earnings of $3.77 a share and revenue of $25.37 billion.
Gross margin widened to 48.7% from 47.6%.
Revenue in IBM's systems-and-technology unit, which includes its hardware business, fell 12%. The unit has now seen year-on-year revenue declines for seven straight quarters.
The software segment's revenue rose 4.1%. Technology services revenue was down 4.6% while business services revenue slid 1.3%.
Services backlog totaled $141 billion, unchanged from the first quarter.
The stock had fallen 7.2% over the past three months, through the close.