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IBM's 3Q earnings likely to extend growth streak

Associated Press Published: October 12, 2012
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SAN FRANCISCO (AP) — IBM Corp.'s third-quarter results are expected to extend the technology company's nearly decade-long streak of earnings growth.

WHAT TO WATCH FOR: The numbers, scheduled to come out Tuesday after the stock market closes, will probably illustrate the stability of IBM's strategy, which emphasizes selling software and a variety of technology services to businesses and government agencies.

The company, which is based in Armonk, N.Y., locks many of its customers into contracts that guarantee regular payments even in tough economic times. That provides IBM with some insulation from the economic uncertainty that has made it tougher for other technology companies to close deals, particularly in Europe and in China, in recent months.

It also helps that IBM no longer has a direct connection to the personal computer industry, where a sales slump has been hurting the makers of microprocessors and desktop and laptop machines.

The business software and technology services sector also generate higher profit margins that selling computer equipment, another advantage working in IBM's favor.

All those factors are why analysts are confident that IBM's earnings for the three months ending in September will at least match the projections that influence investors' decisions on whether to buy or sell a stock. If IBM hits the target set by analysts, it will be the 39th consecutive quarter in which IBM's earnings have been higher than the same time in the previous year.

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