Total revenue for the quarter was US$21.7 billion, just under the $22.5 billion that analysts polled by Thomson Reuters had expected.
But diluted earnings per share were $1.70, a 4 percent increase over the first quarter of 2008. That beat analyst expectations of $1.66 per share. Net income, however, fell 1 percent to $2.30 billion from $2.32 billion.
On Monday, Oracle announced that it had agreed to buy Sun. The deal follows rumors, never confirmed, that IBM had made an offer for the company that Sun deemed too low. The successful deal now puts Oracle in more direct competition with IBM, since Oracle will have a similar combined hardware and software business model.
IBM is still clearly struggling in the ailing economy, . Revenues in its Global Technology Services segment decreased 10 percent compared to the first quarter last year to $8.8 billion, and its Global Business Services segment revenue decreased 10 percent to $4.4 billion.
Revenues from its software segment also declined, dropping 6 percent to $4.5 billion. Revenue from middleware products, which include WebSphere, Tivoli and Lotus, also dropped 5 percent compared to the same period in 2008, to $3.6 billion.
the company is sticking with its full-year 2009 earnings estimate of $9.20 per share and said it is ahead of plan for reaching $10 to $11 per share next year.