International Business Machines Corp. (NYSE: IBM) has now reported its first quarterly earnings report for 2014. Big Blue’s shares were mixed ahead of the report with shares teetering between positive and negative throughout Wednesday’s trading session.

IBM’s earnings came in down 15% at $2.54 EPS and it saw a 4% drop in revenue to $22.5 billion. Expectations from Thomson Reuters were $2.54 EPS and $22.91 billion in revenue. The whisper number was $2.58 per share, according to whispernumber.com.

IBM’s services backlog of $138 billion was up 1 percent adjusting for currency and excluding its divested customer care outsourcing business. IBM is targeting earnings per share in 2014 of at least $18.00 versus the Thomson Reuters estimate of $17.84 per share.

Asia-Pacific revenues led the decline with a drop of 12 percent (down 6 percent, adjusting for currency) to $5.0 billion. Revenues from the company’s growth markets decreased 11 percent (down 5 percent if you adjust for currency). Revenues in the BRIC countries of Brazil, Russia, India and China decreased 11 percent (down 6 percent if you adjust for currency).

IBM’s price to book value was about 9 to 1, which is somewhat high. Its market cap of $205 billion put it in the mega-cap category as well. With a pre-earnings consensus target price of $192.38 from Thomson Reuters ahead of earnings, it has an implied downside of more than 2%.

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IBM sounds cheap on the earnings front at 10-times next year’s earnings expectations, but it has no real growth to speak of. The stock buybacks have been the only thing driving earnings per share growth. IBM also acts as a wild card on the DJIA as it is the second largest component due to its high share price. Other segment reports are as follows:

• Global Technology Services segment revenues were down 3 percent (down 1 percent, adjusting for currency) to $9.3 billion.
• Revenues from the Software segment were up 2 percent to $5.7 billion (up 2 percent, adjusting for currency).
• Global Financing segment revenues were up 3 percent (up 6 percent, adjusting for currency).
• Revenues from the Systems and Technology segment totaled $2.4 billion for the quarter, down 23 percent (down 23 percent, adjusting for currency).
• Business analytics revenue up 5 percent (up 6 percent adjusting for currency).
• Cloud revenue was up more than 50 percent for an annual run rate of $2.3 billion – a double from a year ago.

IBM was just downgraded to Neutral from Buy at Citigroup ahead of the earnings report. Also, Credit Suisse just reiterated its underperform rating and $160 price target last week.

IBM closed at $196.40 and the 52-week price range is $172.19 to $211.98. Shares were down more than 3% at $189.75 or so in the after-hours reaction to the news.

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