Talk about your perfect storm: IBM (NYSE:IBM) reported 2013 revenue that missed analyst expectations, but hit a home run where it really matters, and its stock price became even more attractive. If you happened to catch yesterday's article leading up to IBM's earnings news, its after-hours sell-off wouldn't have been a surprise. And for value investors, IBM's quarter couldn't have turned out any better.

Buying a high-flying stock in the midst of rapid growth is easy; you just have to jump on the proverbial bandwagon. But that's not how you build a portfolio focused on relatively stable, long-term growth. The ideal basis of a sound investment is finding an industry-leading company in the midst of a transition; particularly if the transition is already in full swing with tangible results to show for its efforts, but not accounted for by the market. And that is exactly where IBM stands today, and its recent earnings announcement drove the point home.

The specs
As expected, IBM announced a drop in revenues in Q4 and for the year, primarily because of a 26% decline in hardware sales compared to Q4 2012. Making matters worse -- or better depending on your perspective -- IBM's $27.7 billion in Q4 revenues was way off the too-closely watched analyst expectations of $28.25 billion.

Things were so "bad," IBM CEO Ginni Rometty said, "I have recommended that we forgo our personal annual incentive payments for 2013." A corporate leadership team exhibiting fiscal responsibility, and during a company-altering transformation? Foregoing bonuses until IBM is able to categorically demonstrate that its turnaround efforts are bearing fruit isn't a "sky is falling" admission; it's simply the right thing to do. And with nearly $10.5 billion in cash and equivalents on the balance sheet, it's not like IBM can't afford to write a few bonus checks.

Sure, IBM's recently completed fiscal Q4 diluted earnings were up 12% compared to Q4 of 2012, operating earnings were up 14%, and non-GAAP (before one-time items and charges) net income was up 8% year over year; but let's not throw a wrench in the negative top-line revenue talk. Why? Because for investors in search of value, every bit of negative news that results in a drop in IBM's stock price makes it an even better buy.

The value proposition
While improvements in earnings and net income were nice, those weren't the highlight of IBM's quarter. IBM is in the midst of a huge transition. As each successive quarter illustrates, the hardware business is dying on the vine, and IBM is fighting the losing PC battle. Thing is, Rometty and team know this, and are aggressively changing IBM's focus to cloud computing, in addition to big data, services, and mobile-related technologies.

Consider this: In the last six months alone, IBM has spent $2 billion to acquire SoftLayer -- which has already become the foundation for most of IBM's cloud solutions -- and committed another $1.2 billion to build out its already formidable number of cloud data centers. IBM isn't just talking about transforming its business; its doing it. And the best part for investors? IBM's efforts to become a cloud revenue-generating monster are working.

Somewhat lost in the doom-and-gloom talk surrounding IBM's depressed top-line revenues was the positive quarter that the company enjoyed in its most important business: the cloud. With a total of $4.4 billion in revenues, IBM bumped its cloud sales by 69% in the quarter, and a large portion of that was generated by delivering cloud-related services. As one of the fastest-growing areas of the cloud, IBM's revenue growth in software as a service (SaaS) is worth keeping an eye on, too.

Final Foolish thoughts
With every passing minute, IBM is becoming an even better value opportunity. What investor doesn't dream of finding a financially sound company in the middle stages of a successful transition, that has strong leadership and a clear direction, but has yet to gain the market's favor? Wake up and take a look at IBM; the timing couldn't be better.