IBM's Systems and Technology division took a significant hit, dropping 20 percent to $5.4 billion, a sign that customers are holding off on hardware purchases. System z mainframe sales fell 6 percent, while System p product revenue grew by 8 percent year-over-year. System Storage revenue dropped 20 percent and revenue from Retail Store Solutions shrank by 28 percent.

Fourth-quarter revenue was weakest in Europe, the Middle East and Africa, where it fell 12 percent. Revenue from the Americas fell 2 percent and Asia-Pacific dropped 1 percent.

IBM said it achieved its results by focusing on improving profit margins and investing in growth markets, although it also benefited from a lower tax rate. Its tax rate was 23.8 percent for the quarter, compared to 28 percent in the same period last year.

The company's press release included no announcement about major layoffs, which have been the subject of rampant in recent weeks.

"Right now we're in wait-and-see mode," said Lee Conrad, national coordinator of the Alliance at IBM/CWA Local 1701, a union that is trying to organize workers at IBM, in an interview prior to the earnings release. "We do know people have been told to look for other jobs."