International Business Machines Corp. (NYSE:IBM) announced its earnings for the first three months of 2013 this afternoon after the market closed. The company revealed that it had earned $2.61 per share on revenues of $23.4 billion. The firms shares were down more than 3 percent in after market trading as a result of the miss.

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Analysts had expected the company to show earnings of $3.06 per share on revenues of $24.7 billion. The big miss is one that International Business Machines Corp. (NYSE:IBM) executives will have difficulty explaining to its investors when it is questioned by them in the 5 p.m. EST conference call it is set to host.

In the same quarter of 2012, International Business Machines Corp. (NYSE:IBM) managed to earn $2.78 per share on $24.7 billion in revenue. The last five quarters the company reported were all positive earnings surprises, making the negatives reported today all the more potent.

Today’s loss in share value appears to put an end to an impressive rally by the company;s shares. Through close of market on Wednesday, the stock had risen by almost 9.5 percent since the start of 2013. Stocks fell by a little over 1 percent on today’s market, before taking a serious tumble after the company reported its earnings.

In its guidance for the year ahead, International Business Machine Corp. (NYSE:IBM) maintained its full year EPS guidance at $16.70. That means the company needs to do better in the quarters ahead in order to make up for the faults in the first quarter.

The firm has been making several acquisitions in recent years, and made several big investments including the $1 billion investment it recently made in flash technology. The company needs to continually innovate in the memory sector in order to continue its drive to become the major force in data center servers.

International Business Machines Corp. (NYSE:IBM) is also concentrating on providing tech services and big data to enterprise clients, something the market seems certain is going to become very important in the years ahead, but a business segment that is quite unformed in its current state. IBM will need to convince investors that it really knows where it is going and what it’s doing in that business.

The first quarter earnings report is a step backward for International Business Machines Corp. (NYSE:IBM), but it by no means spells disaster for the company. With EPS guidance remaining the same, and IBM’s track record, many investors will be willing to hold the stock long.