International Business Machines (IBM), the world's top provider of computer hardware, is weighing a "sizable restructuring" after it surprised...

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NEW YORK — International Business Machines (IBM), the world’s top provider of computer hardware, is weighing a “sizable restructuring” after it surprised investors yesterday with a first-quarter profit that missed Wall Street estimates by 5 cents a share.

The company said results were hurt by difficulty closing transactions, increased pension expenses and a drop in sales in Western Europe and Japan.

In after-hours trading, IBM shares fell $3.09, or 3.7 percent, to $80.55 a share on heavy volume after being halted earlier in the after-hours session. The stock fell 93 cents to close at $83.64 yesterday on the New York Stock Exchange.

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“This quarter did not play out as we expected,” said Mark Loughridge, the company’s chief financial officer, who said the company has begun to address weaknesses in sales.

“A couple of those actions may require some sizable restructuring activities, primarily designed to move decision making closer to the customer,” he said. Details of the restructuring will come within the next three months, he said.

Analysts’ estimates for the second half of the year “remain reasonable,” Loughridge said.

The company’s first-quarter net income rose 3 percent to $1.40 billion, or 84 cents a share, from $1.36 billion, or 79 cents a share, a year ago. Earnings from continuing operations totaled $1.41 billion, or 85 cents a share, including stock-based compensation expenses.

Analysts surveyed by Thomson Financial were looking for the company to earn 90 cents a share on sales of $23.7 billion.

Revenue grew 3.3 percent to $22.9 billion from $22.2 billion last year, driven by the weak dollar. After adjusting for currency translations, sales increased 1 percent.

IBM said the quarter was going well until the last two weeks in March, when revenue, especially from small transactions, dropped.

Other problems:

• Sales in Germany, France, Italy and Japan, which account for one-quarter of the company’s revenues, were down 5 percent during the first quarter.

• Expensing options, which is required by new accounting rules, cost the company 10 cents a share for the quarter.

• The company has said increased pension costs will add $1 billion to its spending this year.

IBM, of Armonk, N.Y., had been expected to report quarterly results Monday. The company reported early because “it was the prudent thing to do for investors,” spokesman Edward Barbini said.

Software revenue grew 2 percent to $3.6 billion, with sales of IBM’s middleware brands — which include WebSphere, DB2, Rational, Tivoli and Lotus products — up 3 percent at $2.8 billion. Operating-systems revenue decreased 2 percent to $590 million compared with the first quarter of 2004.

Sales again were boosted by the weak dollar. Without it, software revenues would have been flat.

Revenue from Global Services, IBM’s consulting, outsourcing and maintenance services unit, increased 6 percent to $11.7 billion. IBM signed services contracts totaling $10 billion and ended the quarter with an estimated services backlog, including strategic outsourcing, business-consulting services, integrated-technology services and maintenance, of $110 billion.

Hardware revenue from continuing operations was flat at $6.7 billion. Sales from the company’s systems-and-technology group totaled $3.9 billion for the quarter, up 2 percent on eServer revenue increases.

Total gross profit margin from continuing operations was 36 percent in the latest first quarter, which includes the effect of expensing equity compensation, compared with 35.6 percent a year ago.

IBM said it ended the first quarter with $8.7 billion cash.