Big Blue Should Keep Rollin'

Sacconaghi has a buy rating on the stock. Bernstein or its affiliates exercise investment discretion on more than 1% of outstanding common stock of IBM.

Always in the spotlight for IBM observers is IBM's services business, which makes up more than half of total revenue, and has been inconsistent in past quarters.

Thomas Weisel analyst David Grossman noted that large deal volume in the fourth quarter should help calm fears about the secular growth of global services. The company has also seen a "turnaround" in short-term signings.

"We believe (IBM Global Services) fundamentals have bottomed and the strong fourth quarter bookings will engender increased confidence in the 2007 outlook," he wrote. Grossman's firm has a banking relationship with IBM.

Sacchonaghi also sees a strong services quarter, forecasting signings of $17 billion. "This would represent a 50% year-over-year increase in quarterly signings and result in full-year signings growth of 3%."

But others aren't quite as bullish on the company's cash cow.

A.G. Edwards analyst David Wong downgraded the company to hold last week, believing the stock has reached its fair value, while citing "recent lack of growth in bookings in its services business."

Wong wrote that IBM's excellent EPS and revenue growth should continue, but believes its long-term sales-growth potential is low. His firm is long IBM shares.