IBM's quarterly revenue missed Wall Street's expectations as a weaker euro hurt overseas sales, although firm growth in the company's higher-margin services and software units bolstered profit.
Texas Instruments also reported a quarterly revenue a whisker off expectations, analysts said.
Shares in both companies slid more than 3 percent.
KEITH SPRINGER, PRESIDENT, CAPITAL FINANCIAL ADVISORY
It's all about top-line and what have you done for me lately. This is a kind of market that doesn't care about yesterday or even today. People are worried about what will happen tomorrow.
These earnings are not justifying the stock market to rise another 10, 20 to 30 percent from current levels. The market is taking a negative view even though the earnings are pretty good.
This is going to hurt across the board because technology has been the leader in this rally.
MARK DEMOS, PORTFOLIO MANAGER, FIFTH THIRD ASSET
Revenues were not as strong as people were expecting. There were some currency hits that people were expecting. But even with that, it might have been a little bit weaker than people were expecting.
The big thing is that the services signings were $12.3 billion. Expectations were for $14 billion or flat. They were down 12 percent year over year. Things are improving -- we're coming out of the recession -- and services signings is one of the indicators that people would like to see at least grow from year over year.
The decline in services signings was especially disappointing because two key rivals, Accenture Ltd and Infosys Technologies Ltd had posted pretty good revenue growth and year-over-year growth in bookings.
TIM GHRISKEY, Chief Investment Officer, Solaris Asset Management
The earnings were good, better than expected, but it was really the revenues that investors are focusing on.
The earnings surprise is great, the margins were good, but the issue really was the revenue shortfall and guidance that was a couple cents shy of consensus.
I don't think this reflects on what to expect out of the rest of technology for the coming weeks. We don't expect wildly positive surprises in earnings like Intel had, but we think the majority of companies are likely to beat revenues and earnings.
Technology seems to have a lot more going on in terms of new product cycles than a good part of the rest of the economy. IBM's results probably aren't reflective of the rest of technology here, so much of what IBM does is services.
BRIAN MARSHALL, ANALYST, GLEACHER & CO.
This was to be expected. This is the first quarter in a while that we haven't seen some nice upside from IBM. They were clearly affected from forex headwinds, but at the end of the day, IBM continues to suffer from the law of large numbers.
The company is struggling to find good growth opportunities
.... Revenues were less than people were expecting.
Service signings were $12.3 billion and I was looking for service signings of $14 billion -- that was a pretty low number.
In an upcycle, you want something with more leverage. Despite the fact that IBM is the largest infrastructure, I wouldn't read into that being indicative of industry trends. They have minimal exposure to hardware.
I don't believe in a double-dip and I don't think it's going to happen this time around.
They're moving down the right path, they're very consistent in their management approach.
DOUG FREEDMAN, ANALYST, GLEACHER & COMPANY
The guidance looks pretty good, the market seems to be looking past the guidance and seems more concerned that this (quarter's revenue) starting point is a little lower than people had hoped.
(Reporting by Jim Finkle in Boston, Alex Dobuzinskis and Carolina Madrid in Los Angeles, and Matthew Lynley and Richard Leong in New York)