International Business Machines Corp. (NYSE: IBM) was downgraded from a Buy to a Neutral rating by a Goldman Sachs (NYSE: GS) analyst after the firm reported its earnings for the first quarter on Wednesday.

The report was in line with expectations from analysts polled by Thomson Financial. The firm reported a net income of $1.84 billion, or $1.21 a share, compared with $1.71 billion, or $1.08 a share a year ago.

Goldman analyst Laura Conigliaro told clients in a note this morning that growth in the U.S. region will likely be flat or down, remarking that the company’s largest segment, Americas, grew only 1 percent.

This and IBM’s comments about a weaker US spending environment, coupled with similar comments from other companies, make it unlikely that the stock will be able to outperform in the near term, she said.

In a conference call with analysts after the end of trading on Tuesday, IBM's Chief Financial Officer Mark Loughridge reiterated the firm’s full-year earnings per-share to growth of 11 percent from 2006, when it earned $6.06 a share.

Goldman also left its yearly projection of $107 for IBM intact, citing current price-to-earnings ratios and cash flow, but it doesn't expect appreciation to those levels until later 2007.

IBM shares fell $2.58, or 2.7 percent, to $94.54 in early afternoon trading on the New York Stock Exchange.