By Kevin Kelleher
March 14, 2014

By Kevin Kelleher, contributor

FORTUNE – For years, IBM (IBM) was that rare tech giant: beloved by investors despite sluggish revenue growth. That was because the company was as determined as it was clever about ratcheting up its earnings-per-share figure. But two years into Ginni Rometty’s tenure as CEO, the company faces a double dilemma: Revenue is shrinking while the company is having trouble hitting its ambitious EPS targets.

IBM’s stock is down 13% over the past year, while the S&P 500 (SPX) is up 19% in the same period. Over the previous four years, IBM had been outperforming the S&P 500, rising 126% to the benchmark index’s 97%.

IBM made a pledge to investors in the guise of a roadmap: generate $20 in earnings per share by 2015. It’s an impressive goal, especially when you consider that the company’s EPS in 2002 was only $1.81 a share. IBM has set out similar goals — an earlier roadmap vowed $10 EPS by 2010 and reached that figure a year early.

But this time some are wondering how the company will get there. Including IBM. In the company’s annual report released this week, Rometty wrote in a letter to shareholders that “our performance did not meet our expectations” as revenue and operating income both declined in 2013. Yet IBM is determined to reach that $20 EPS goal in any way it can.

Some analysts have suggested the company has so many levers to pull in driving earnings per share higher, like aggressive buybacks and layoffs, that the roadmap has lost relevance. IBM beat the Street’s profit forecast last quarter, for example, largely because of lower taxes. This year, it will be aided by the $2.3 billion sale of its server business to Lenovo.

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With all those levers, Wall Street is expecting IBM to reach the targets. But all while overlooking another important line on the income statement: revenue. IBM’s revenue has been shrinking for the past seven quarters. Analysts expect the company to see revenue decline again throughout 2014.

IBM’s revenue comes from a broad array of divisions, from software to hardware to consulting to outsourced IT services. Over the past two years, software has been the only division to see consistent growth. The largest segment, global IT services, fell 4.3% last year. The biggest decline came from hardware like servers and storage: down 18% last year after falling 8% in 2012.

The revenue decline in hardware has been showing signs of accelerating, falling 26% in the fourth quarter. Gartner estimates that sales of servers around the world fell 6.6% in the quarter. Even within that shrinking market, IBM saw its share slide to 26.5% from 34.5% in the year-ago quarter.

A good portion of revenue declines came in hardware sales to China, which has curtailed purchases from U.S. companies in the wake of the NSA spying scandal. IBM’s revenue from China declined 23% last quarter. Rometty paid a three-day visit to China last month, reportedly to restore trust in a business relationship that stretches back three decades.

Rometty is also wasting no time cutting back on the weak hardware business. In late January, shortly after IBM said hardware weighed down overall sales, the company announced a sale of its low-end server business to Lenovo for $2.3 billion, a discount to the $4 billion price cited last spring.

IBM is also cutting as many as 13,000 of its 431,000 jobs as part of a $1 billion restructuring plan aimed at helping the company meet its goal of $20 EPS by 2015. Late last week, reports emerged that IBM was cutting up to a quarter of its hardware jobs, beyond the 7,500 workers affected by the sale of its low-end servers group to Lenovo.

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While IBM is trimming back its hardware division, Rometty has been trumpeting its initiatives that could lead to future growth: cloud, big data, mobile apps, and its Watson AI system. The company’s Smarter Planet initiative, combining cloud technology and analytics, rose 20% last year. Revenue from cloud-based services rose 69%. And last week Rometty encouraged developers to create apps powered by Watson.

The push into new areas of growth is reminiscent of the push IBM made nearly a decade ago, away from PCs — selling that division to Lenovo in 2005 — and further into software and IT services. The difference this time is that while some of the areas Rometty is pushing into, like analytics, suit IBM’s strengths, others like cloud computing risk cannibalizing its core IT and software businesses with lower-cost models.

Given all these moving pieces, it would be understandable if IBM didn’t meet its $20 EPS target by 2015. One of the more powerful levers it has is buybacks, which have reduced its shares outstanding to 1 billion from 2.3 billion over the past 20 years. The $15 billion the company added to its buyback arsenal late last year will surely help prop up the earnings-per-share figure by shrinking the denominator.

Increasingly, some are suggesting that it’s the numerator in the EPS figure that needs attention, especially as long as revenue is declining. The company has $11 billion in cash on hand that could be better directed at shrewd purchases of small but promising big data, cloud, and AI companies. One prominent short-seller is suggesting IBM’s heavy buybacks could be a sign of weakness.

Layoffs, buybacks, and selling off weak divisions are necessary moves for a company trying to stay ahead in a competitive arena like enterprise IT. But they only take you so far. If you’re in tech and investors aren’t seeing growth, they’ll take it out of the stock price. As important as EPS is to investors, it’s not as important as the simple price that the market is paying for a stock.

Correction: An earlier version of this post said that “the company’s EPS in 2012 was only $1.81 a share.” It has been corrected to 2002, not 2012.

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