IBM Poised to Please

Still, while IBM isn't the kind of stock most investors buy for a one- or two-quarter run, the company's longer-term picture also seems to be brightening.

"While data points from 3Q and 4Q are important, the key theme underlying our investment thesis is that fundamentals within IBM's services unit ... are bottoming and growth should reaccelerate over the next 12 months," Thomas Weisel analyst David Grossman wrote in a recent note. His firm does and seeks to do business with the companies it covers.

He says that restructuring has paid off, and global services' pretax margins have consistently improved since the fourth quarter of 2005. Still, reacceleration in bookings and sales growth hasn't been as speedy as he would like.

In IBM's hardware and software divisions, Citigroup analyst Richard Gardner sees third-quarter upside in both areas based on strong IT spending and product cycles for several of IBM's servers. His firm does and seeks to do business with the companies it covers.

UBS analyst Benjamin Reitzes says that the company has resolved some of the hardware gaffes from the last quarter. It is now shipping its high-end System P servers and has fixed its Restriction on Hazardous Substances issues with its System X line. In the second quarter, System P servers sales fell 10%, System I revenue declined 7% and System X was flat.

"Software seems to be executing well while also benefiting from acquisitions," Reitzes wrote. His firm has an investment banking relationship with IBM.