The outfit’s revenue fell for the 13th quarter in a row and missed the average analyst estimate.
A strong US dollar is being blamed and the fact it is continuing to kill off low yielding parts of its Empire.
IBM wants to concentrate on high-growth areas like security software, cloud services and data analytics.
The company, which sold its x86 server business to Lenovo last year, has continued realigning its operations by paying contract chipmaker Globalfoundries (GloFo) Inc to take over its loss-making semiconductor unit this month.
Revenue from what the company calls “strategic imperatives”, which include cloud and mobile computing, data analytics, social and security software, rose about 20 percent, yet the new businesses have so far failed to make up for revenue lost to divestitures.
IBM said it expected third quarter revenue to be the same as revenue from the first quarter, or about $19.6 billion.
Revenue from its software business fell 10 percent to $5.8 billion from last year.
Revenue from global technology services such as outsourcing fell 10 percent, hurt by weak discretionary IT spending by clients.
Big Blue’s total revenue fell to $20.81 billion in the second quarter ended June 30, from $24.05 billion a year earlier, missing the average analyst estimate of $20.95 billion.