IBM's revenue fell slightly short of Wall Street expectations, sending its shares down almost 2 percent in late trade even as the company beat quarterly profit expectations and boosted its full year earnings target.

The company, whose shares had closed up 2 percent on Tuesday, reported revenue of $24.7 billion -- flat with the previous year and below analyst expectations for $24.78 billion, according to Thomson Reuters I/B/E/S.

However, some investors were heartened by the strong guidance for the full year and IBM's profit growth.

I think the stock was priced for perfection, said ISI Group analyst Brian Marshall. Revenue was a little light relative to expectations. They did a good job on the bottom line. The guidance was good.

International Business Machines, which has been shifting its focus from hardware to higher-margin services and software over the past decade, said earnings per share, excluding items, was $2.78 -- beating average analysts' earnings per share estimates of $2.65 and in line with revenue expectations of $24.78 billion.

Net earnings rose 7 percent to $3.1 billion in the first three months of the year.

The company raised its full year target to at least $15 adjusted earnings per share on strong demand for its software services and growth in emerging markets. Its previous target was for at least $14.85.

What they're doing is maximizing their operating margins by making sure they're not taking on revenue opportunities that aren't going to give them high margins, Marshall said.

Some analysts had expected IBM to raise its 2012 guidance.

IBM competes with business software makers Oracle Corp and SAP AG as well as outsourcing company Accenture and computing giant Hewlett Packard.

The company's shares fell 2 percent to $203.50 in late trade after closing up 2 percent at $207.45 on New York Stock Exchange.

(Reporting By Nicola Leske and Sinead Carew; Editing by Bernard Orr)