IBM missed its estimates in the first quarter of 2013 as hardware sales slow down.

IBM reported revenues of $23.4 billion and net income of $3.4 billion, with earnings per share of $3. This falls short of the $24.6 billion analyst estimate from Bloomberg. Hardware revenues fell particularly flat, totaling $3.1 billion for the  quarter. This down 17 percent from the first quarter of 2012.

IBM’s financial performance is likely affected by drops in spending from its major customers in the technology and government sector.

The company is already considering new growth opportunities in cloud service and “big data” technology. It recently announced it would be investing $1 billion in flash storage research and development. With the funds, IBM sees a solution in flash memory, which has the potential to process the data faster, more reliably, and with less energy than a hard disk drive full of moving parts.

In February, IBM said its data-analysis business is already high-performing and is expected to add $20 billion in annual revenue by 2015.

In other bad news, IBM is cutting as much as 14 percent of its workforce in France, Bloomberg Businessweek reports.

Ginni Rometty, IBM’s chairman and CEO, issued the following statement, and touched on new growth initiatives:

Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter. The services business performed as expected with strong profit growth and significant new business in the quarter. Looking ahead, in addition to closing those transactions, we expect to benefit from investments we are making in our growth initiatives and from the actions we are taking to improve under-performing parts of the business. We remain confident in this model of continuous transformation and in our ability to deliver our full-year 2013 operating earnings per share expectation of at least $16.70.