Leading up to its earnings report on Thursday,

IBM

(IBM) - Get Report

is surfing a wave of high expectations.

Despite its heft -- with some $80 billion in annual revenues, it's by far the biggest player in techland -- Big Blue offered one of the best growth outlooks in the business for the fourth quarter, and plenty of analysts think it can pull out an upside surprise on top of that.

Though the stock has soared 60% since bottoming in October, Wall Street seems to be betting it will climb higher. But there are notes of skepticism evident, with some investors wondering if IBM will be able to satisfy all the high expectations when it gives guidance.

Still, on the fourth quarter, analysts are upbeat across the board, predicting strong results in IBM's hardware, software and services lines. As a potential bonus, some expect IBM's chip business to finally turn a profit, removing what had been a drag on earnings in prior quarters.

"Share gains in a difficult environment aided hardware sales

we even heard PCs did well, and we think software recovered somewhat from a disappointing 3Q to aid the top line," predicted a note from Merrill Lynch, raising the possibility that IBM will beat earnings by a few cents.

The consensus estimate suggests IBM can pull off a 17% gain in revenues, including sales from its PwC unit, just a notch above company guidance last October for 16% growth. Revenue for the fourth quarter is expected to reach $23.2 billion with earnings per share of $1.30.

Both Lynch and UBS Warburg expect services bookings in the $16 billion range, which would mark a huge jump from last quarter's disappointing $9 billion. There's reason to be hopeful: Over the past quarter, IBM has touted deals amounting to some $8.5 billion with J.P. Morgan and Deutsche Bank, among others, and analysts expect an equal number of deals haven't been made public.

UBS Warburg's Don Young predicts IBM will beat the consensus estimate of $1.30 a share by 5 cents to 10 cents on stronger-than-expected hardware sales.

"IBM remains one of our favorites in this 'technology winter' and we believe this is the best positioned of all tech players with its predominantly annuity-like financial model," he said in a note. UBS Warburg has done recent banking for IBM.

But following what looks to be a robust fourth quarter, analysts are gearing for a seasonal drop-off in business in the first quarter. IBM's sales are expected to slide about 15% in the quarter under way, according to Thomson Financial/First Call.

Even that outlook may be too optimistic, says Patrick Adams, manager of the

(CHLAX)

Choice Long-Short fund. "IBM may be vulnerable to guidance down in the first quarter," he says. But while Adams doesn't hold the stock, neither is he shorting it. "My feel is that the stock's not quite expensive enough. The tape still has a positive feel," he says.

The stock has climbed 13% in just the first two weeks of 2003. IBM closed down 99 cents, or 1.1%, to $87.59 on Wednesday.