Earnings Preview: IBM To Report 3Q Results

JORDAN ROBERTSON

SAN FRANCISCO (AP) — IBM Corp. reports third-quarter earnings after the market closes Thursday. Below is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Armonk, N.Y.-based IBM has managed to keep boosting profits despite the recession and slumping sales, a fact that speaks to the company's reliance on technology services and software. Those are two things many companies are still willing to pay for, because they help save money by offloading or automating information-technology chores.

IBM is expanding into areas like "smart" power grids to help utilities infuse more computing intelligence into their systems. Those deals can carry higher profit margins than other services deals because of the specialty skills needed.

Also, IBM is a relentless cost-cutter, shifting jobs to parts of the world where labor is cheaper and the company is signing more deals.

All of those were reasons why IBM was able to surprise Wall Street in July by raising its full-year earnings guidance to at least $9.70 per share, up from at least $9.20 per share. The company's gross profit margin, another key measure of its ability to control costs, increased in 19 of the last 20 quarters on a year-over-year basis.