All things considered, it's a pretty good time to be Big Blue.

All spring, while tech giants like

Cisco

(CSCO) - Get Cisco Systems, Inc. Report

,

Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

,

EMC

(EMC)

and

Oracle

(ORCL) - Get Oracle Corporation Report

were busy scaring the bejesus out of former momentum investors and pensioners alike,

IBM

(IBM) - Get International Business Machines (IBM) Report

hasn't uttered so much as a peep. Now, with the computing systems behemoth set to report its first-quarter results Wednesday after the close of regular trading, a wised-up Wall Street is bracing itself for another high-profile warning. But truth be told, observers aren't looking for a disaster on the massive scale that is becoming common in the tech sector these days.

That might seem perverse at first glance. After all, last month investment research firm

Fechtor Detwiler

reported that Cisco, addled by inventory problems, was canceling ASIC, or application specific integrated circuit, orders at

IBM Microelectronics

, an IBM unit with about $4 billion in annual revenue. More to the point, it's hard to believe that a company as extensive as IBM -- its 2000 sales totaled nearly $90 billion -- won't feel the effects of the current slowdown.

But at the same time, IBM remains relatively shielded by the one thing for which critics have pounded the company during the past few years of hypergrowth in select technology groups: its extreme diversity, and its great exposure to the mainframe business, an industry on which IBM holds a virtual lock, and which produces a stable stream of recurring maintenance and service revenue.

Serve the Servers

"They're not positioned in the same way many of their competitors are," says Gary Helmig, an analyst at

Wit Soundview

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. "They don't have a big consumer PC business like

Compaq

(CPQ)

. They don't have a big dot-com business like Sun did. Their leading-edge products were their servers, and the services business continues to be a trump card." (Wit Soundview hasn't done recent underwriting for IBM.)

IBM's services business has pulled in more than $12.5 billion in new bookings in each of its last three quarters, ending 2000 with an incredible backlog of $85 billion worth of outsourcing deals. With that sort of power in the pipeline, and with a $15 billion outsourcing deal with Japanese wireless giant

NTT DoCoMo

expected to close in the second quarter, any weakness suffered over the last few months shouldn't have a disastrous effect on IBM's sales or profits.

IBM's competitors don't have that sort of cushion when times get tough.

"The facts bear that out," says

Sanford Bernstein

analyst Toni Sacconaghi. "About 40% of IBM's revenue and 60% of its profits are annuity or backlog-driven. At Sun, those are about 15% of its revenue and profits. The structure of the businesses is clearly different. That's part of the reason you're seeing strong roundabout performance compared with people like Sun and EMC." (Sanford Bernstein hasn't done recent underwriting for IBM.)

They're Not Booing ...

Times have surely changed since the hypergrowth-or-bust days. A company like IBM, with its gigantic exposure to a slow-growing legacy business like mainframes, just couldn't live up to that billing, no matter how well it spun investors with sugarplum visions of "e-services." Now, possessing the sort of focus IBM lacks is proving troublesome to former Wall Street darlings specializing in New Economy gear like Unix servers or storage systems. Just last week, network-storage upstart

Network Appliance

(NTAP) - Get NetApp, Inc. (NTAP) Report

confessed that a greater-than-expected slowdown in orders would cause the company to miss sales by nearly 30%, and miss earnings by a shocking margin of 70% to 90%. NetApp's management blamed the severity of the shortfall on the company's reliance on new customers, which make up 35% to 40% of sales each quarter.

Wednesday evening could offer IBM a chance to produce something of a relative victory: adjusting its guidance for revenue lower, but reaffirming EPS estimates. If anyone's able to shield the bottom line in a bad environment, it's got to be CEO Lou Gerstner. Right now, he may be pulling out the well-thumbed manila folder labeled "Earnings Management" from the file cabinets he brought with him from

RJR Nabisco

more than eight years ago. Stock buybacks, sales in myriad business lines pulled in from future quarters, sales pushed out from prior ones --

Sweet Lou has a lot of weapons at his disposal.

The Big Sleep
IBM investors on the slow boat

Trading at 19 times estimated 2001 earnings, IBM is hardly a cheap stock. And the question of how long Gerstner can keep pulling rabbits out of the earnings hat persists: Over the past five years, IBM has posted average annual sales growth of just 3.8%. Sooner or later, skeptics say, it will hit the wall.

But Wednesday isn't about any of that. The fact is that if earnings stay on track at IBM, the stock, which has been unable to get out of its own way for the better part of two years now, could see another run-up. The old psychology that put present sales growth over future earnings has reversed in this market.

"People didn't reward it last year because investors wanted revenue growth," says Sacconaghi at Sanford Bernstein. "But they'll be very happy to get EPS growth this year."

Analysts polled by

Thomson Financial/First Call

expect IBM to earn 98 cents a share in the quarter, 18% higher than the 83 cents it made in the year-ago period. Sales are expected to total $20.8 billion, up 7.5% from last year's $19.4 billion.