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The company said it anticipates revenue of $18.4bn (£12.84bn) to $18.6bn (£12.98bn) for the quarter ending 31 March, compared with $21bn in the first quarter of last year. Pretax profit is expected to be between $1.65bn to $1.75bn, IBM said, versus pretax profit of $2.49bn in 2001's first quarter.
IBM's hardware business, particularly its original equipment manufacturer (OEM) operations, was hardest hit during the quarter, said John Joyce, IBM's chief financial officer.
IBM expects its Technology Group to post a 35% revenue decline and a $200m pretax loss, he said. The Technology Group includes IBM's microelectronics and storage technology product portfolios.
The Global Services group, the centrepiece of IBM's transformation during the last decade, has also been hit by slow corporate IT spending.