International Telephone & Telegraph Corp. reported a sharp drop in first-quarter earnings yesterday but blamed the decline mostly on adverse foreign currency translations.

Net income was $173 million ($1.17 a share), compared with first-quarter 1980 results of $347 million ($2.38). Revenues were $5.5 billion, the same as reported in the 1980 first quarter.

ITT Chairman Rand V. Araskog said foreign currency translation resulted in a 13-cent-a-share loss, compared with a 95-cent gain in the 1980 period.

The 1981 results also were affected by an extraordinary charge of $17.8 million (13 cents) for a settlement with the Internal Revenue Service in connection with ITT's acquisition in 1970 of the Hartford Fire Insurance Co.

Araskog said that if the tax-settlement and foreign-exchange factors are eliminated, first-quarter pershare earnings in both years would have been the same.

General Foods Corp's earnings for the fourth quarter ended March 28 rose 21.7 percent from the same period in 1980, while profits for the fiscal year were virtually unchanged from the previous year.

The nation's largest manufacturer of processed foods attributed the fourth-quarter game to a rebound in earnings from grocery coffee sales, improved international operations and lower effective tax rates. It said a 13-cent-a-share tax credit resulting from changes in the British tax law also contributed to the increased earnings.

Fourth-quarter earnings were $72.5 million ($1.47 a share), compared with $59.6 million ($1.19) in the year-earlier quarter, General Foods said. The company reported sales of $1.72 billion for the final quarter, up 10 percent from $1.56 billion a year earlier.

For the fiscal year, earnings totaled $255.4 million ($5.14), down ; slightly from $255.8 million ($5.12) in fiscal 1980. Sales rose 10.8 percent to $6.60 billion from $5.96 billion a year ago.