IBM Not Getting Enough Credit; Buy on a Dip

(The following commentary comes from an independent investor or market observer as part of TheStreet's expert contributor program.)

ARMONK, NEW YORK ( TheStreet) -- Technology bellwether IBM ( IBM) isn't getting the respect it deserves, so any pullback under $200 would represent a tremendous buying opportunity.

IBM is worth a closer look for a variety of reasons, not the least of which is the fact that the company has been on a considerable tear all year and has logged what seems like a new 52-week high each week.

The company's recent performance interests me quite a bit because it is hard to imagine that just a few years ago the company known as "Big Blue" was teetering on the verge of irrelevance. IBM languished under a stifling corporate culture and a crackpot attempt to take over the consumer and business technology hardware and software market.

Today, IBM is once again a beacon of power and one that along with Apple ( AAPL) has led technology resurgence that two quarters ago seemed unimaginable.

Going into IBM's earnings announcement on Tuesday, I was eager to see if it would be able to build on the momentum that started at the beginning of the year.

The Quarter That Was

For the January-March period, IBM reported earnings of $3.07 billion or $2.61 per share - representing an increase of more than 7%. Excluding special items such as acquisition costs and pension-related expenses, the company earned $2.78 per share, well above the $2.66 per share that analysts were expecting. That was the positive side of the report. On the not-so-good side, the company reported flat revenue of $24.7 billion - lower than the $24.82 billion that analysts had been expecting.

The company attributed the decline in part to hardware and financing segments that experienced some declines even as its software and services revenue saw an increase. This was not a surprise, as the company had demonstrated a considerable amount of focus on its services business due to their higher profit margins.

Overall the report was good but I can't help but to describe what I observed as a market overreaction to the company's miss on revenue - as narrow as it was. That said, it seemed it was enough to slow the momentum of the stock as investors took it as a sign of weakness. The stock fell approximately 2% in after-hours trading to $203.45 after having gained $4.73 to close regular trading at just over $207.

Moving Forward

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