For the first time in the last five quarters, IBM (NYSE: IBM) missed revenue expectations for the quarter. The market is understandably unhappy, and the stock has plunged more than 5% in the after-hours trading session.

IBM’s Financials
This was also the 20^th consecutive quarter that IBM posted a revenue decline. Revenues for the first quarter fell 3% to $18.16 billion compared with the Street’s forecast of $18.396 billion. Adjusted earnings of $2.38 for the quarter were better than the Street’s estimates of $2.35. The earnings beat was driven by IBM’s continued drive to manage costs. Operating expenses reduced by 20% in the quarter, primarily due to headcount rationalization initiatives. However, it increased its spend on R&D initiatives which grew 5% over the year.

By segment, revenues from Cognitive Solutions grew 2.1% to $4.1 billion, driven by growth in analytics and security. The Cognitive Solutions segment includes revenues from IBM’s Watson initiative. Global Business Services revenues were down 3% at $4 billion despite a double-digit growth in the strategic imperatives division which includes the cloud and mobile practices. Technology Services & Cloud Platforms revenue fell 2.5% to $8.2 billion and Systems revenues fell 17% to $1.4 billion. Global Financing revenues were down 1% to $405 million.

For the quarter, strategic imperatives revenues grew 12% to $7.8 billion. On a trailing twelve-month basis, strategic imperatives revenues came in at $33.6 billion, accounting for 42% of its total revenues for the period. Cloud revenues came in at $14.6 billion and Cloud-as-a-Service annual exit run rate grew 59% to $8.6 billion in the quarter.

IBM reassured the market that it was still forecasting an operating EPS of at least $13.80. The market was looking for a full year EPS forecast of $13.78.

IBM’s Growth Engines

While the numbers may not seem impressive, IBM is confident of a bounce back as it continues to invest in the new growth segments of cognitive solutions: cloud and mobile technology. As part of this focus, it has been tying up with several other tech players. Earlier this week, it announced that it is working with Continuum Analytics to offer Anaconda, a leading Open Data Science platform, on IBM Cognitive Systems. Anaconda will integrate with the PowerAI software distribution for machine learning and deep learning to simplify and accelerate Power performance and GPU optimization for data intensive cognitive workloads. Anaconda has had more than 16 million downloads to provide businesses with the ability to transform data into actionable information by identifying data patterns.