This fine Tuesday, IBM reported its fourth-quarter financial performance and was greeted with raspberries from investors with period revenue of $27.7 billion and earnings per share excluding items of $6.13. Using GAAP, IBM earned $6.2 billion, or $5.73.

Off nearly a percent in regular trading, IBM eased another 2.5 percent in after-hours trading. Investors had expected IBM to earn revenue of $28.25 billion and non-GAAP earnings per share of $5.99. So IBM beat on profit, but faltered on the top line question.

As ZDNet points out, “IBM missed its revenue targets every quarter in 2013.” Zing.

Right, so what’s going on? Well, the company’s hardware business had a terrifically terrible fourth quarter. As MarketWatch notes, “IBM’s systems and technology segment, also known as hardware, saw sales fall 26%, as pre-tax earnings fell by $768 million to $200 million.” Yes the hardware market is rough for incumbent players, but IBM’s decline in the category rivals the beleaguered PC OEM market.

Revenue from hardware totaled $4.3 billion. IBM’s services group’s revenue fell 3.6 percent to $9.9 billion. The company did have a ray of sunshine to report, with software revenues up 2.8 percent to $8.1 billion, performance that CNBC called a “bright spot.”

It’s worth noting that IBM had fourth-quarter revenue of $29.3 billion in 2012, so the company contracted on a year-over-year basis despite an improving economy.

The downward swing in IBM’s share price was perhaps somewhat sedate compared to what we see in younger technology firms, but following a number of preceding misses, there was little optimism premium built into its valuation. Still, another disappointment from Big Blue.

Short-term profitability can keep your stock afloat, but it is out of revenue growth that future net income is born.

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