RESEARCH TRIANGLE PARK, N.C. – IBM’s software division will be getting more attention from Sam Palmisano and the other top execs in the future. That could be good news for the RTP campus of Big Blue where a lot of software workers write code every day.

We hear from sources that IBM continues to add headcount in the software group despite the continuing layoffs, especially in Global Services. And word is the 12,000 layoffs that are rumored to be announced at the end of the month may not hit the Tivoli and other groups too hard.

That story appeared to gain more credibility on Thursday in New York when CEO Palmisano and other execs brief Wall Street analysts and reporters. Palmisano outlined plans to double IBM’s earnings by 2010, and he said a key driver would be more attention on software.

The Financial Times noted that IBM has made more than 50 acquisitions related to software since Palmisano took over as top exec in 2003. Software now accounts for 40 percent of IBM’s pre-tax profits of $13.3 billion last year. That’s an increase of five percentage points since 2004, FT noted. IBM’s software business is second in the world to Microsoft, the paper added.

Palmisano noted that IBM would continue to attack the middleware market and was not targeting Microsoft, oracle or SAP directly.

"We are not going after the space they are in," he told the British newspaper. "We are going after the thousand of other [companies] in this very fragmented software space."

Palmisano also spent time addressing one of his most important initiatives – growth in emerging markets. He wants to double revenues in places such as India, Brazil and China. In India, IBM is hiring thousands of people as more and more U.S. jobs are offshored.

Wall Street is embracing Palmisano’s efforts, too. IBM shares closed at $105.31 on Thursday. That’s just off its 52-week high of $106.25,

And get this: IBM stock has soared from a 52-week low of $72.73.
The more IBM cuts, the more investors buy. But not everyone is impressed.

“Given what IBM stood for over many decades, this is really to bad,” wrote Dougles McIntyre at a 24/7 Wall Street blog. “IBM was at the heart of US technology innovation. It filed for more patents than Thomas Edison did, year in and year out.

“But, IBM’s plans reveal a sort of self-loathing. The things the company cannot do with better products and services, it will do by pushing out people, cutting their benefits, and buying in shares. It is the poor man’s way to build an attractive investment.”

The AP’s Brian Bergsteinn noted that IBM’s growth strategy includes “enough cost cuts, acquisitions and stock-buyback opportunities” to double its return.

Here’s how AP breaks down IBM’s plans:

“Of the roughly $5 increase in earnings per share that IBM says is possible by 2010, 75 cents comes from the assumption that IBM’s recent growth rates will continue. IBM sees another $1 coming from wide-ranging efforts already under way to cut costs and boost profit margins; $1.10 from more than $40 billion worth of stock buybacks; $1.20 from acquisitions and other future growth initiatives; and 90 cents from retirement-related savings. IBM is freezing accruals in its pension plan after this year. “

Bergsteinn also pointed out that IBM has been on a “stock-buyback tear,” spending $27 billion on its own shares between 2003-2006. And another $16.4 billion in buybacks was approved by the IBM board last month, he noted.

Analyst Bob Djurdjevic of Annex Research told Bergsteinn that IBM can achieve its earnings goal but added that he would prefer to see Big Blue put more money into business prospects rather than driving up its own share price.

Maybe IBM will. Maybe it won’t.

IBM’s workers are certainly waiting to see what Palmisano does next.