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IBM earnings: Street watches for signs of tech tebound

IBM reports earnings today

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IBM Corp.  (NYSE: IBM) will report second-quarter results Thursday amid an unsettled technology market that’s been sending mixed signals.

Investors are betting that IBM, which employs more than 10,000 people in the Research Triangle area, will continue to improve its profit margins.

But there are some signs the industry isn’t turning around fast enough. Analysts point to a lower-than-expected sales forecast from IBM’s chief rival, Hewlett-Packard Co., and a 16 percent sales drop in the latest quarter from another competitor, consulting and outsourcing firm Accenture Ltd.

IBM is expected to earn $2.02 per share on $23.59 billion in sales, according to analysts polled by Thomson Reuters.

"In today's challenging economic climate, this earnings growth is very impressive," wrote Brian Marshall, an analyst at Broadpoint AmTech, in a recent note as reported by The Street. However, Marshall warned that hurdles remain, pointed out The Street's James Rogers.

"We are concerned about the timing of broad adoption of cloud-based options, as well as the longer-term negative implications of increased competition, primarily from H-P and Cisco," Marshall said, according to Rogers.

Last year, profit totaled $1.97 per share on revenue of $26.82 billion.

Google also reports earnings today.

"IBM might top Google, in terms of percentage earnings growth," said Yankee Group analyst Carl Howe, according to CNN Money. "They made the right move into services at right time -- services businesses are doing better than others during the recession, because once you've gotten someone else to mow your lawn, it's hard to go back to doing it yourself."