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) --


(IBM) - Get International Business Machines Corporation Report

revenue is barely budging as customers dial back spending on technology and related services.

Armonk, N.Y.-based IBM is "running out of levers" to support its traditional earnings growth of around 10%, as margins are "maxed out" and share repurchases are already greater than free cash flow, ISI Group analyst Brian Marshall said in a note Tuesday. "Headwinds are getting stronger for the IT service industry."

The company reports fourth-quarter results after the market close on Tuesday. IBM edged past Wall Street's earnings forecast in its

third-quarter results

, released in October, but currency pressures weighed heavily on revenue.

A tech bellwether, IBM has traditionally been seen as a barometer for tech spending. Last week, chipmaker


(INTC) - Get Intel Corporation Report

, another key player, reported its own


results, exceeding analysts' estimates, but delivered weaker-than-expected guidance.

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Analysts surveyed by

Thomson Reuters

expect IBM to report revenue of $29.07 billion and earnings of $5.25 a share, compared to $29.5 billion and $4.71 a share a year earlier.

The fourth quarter of 2011, however, included around $240 million of revenue from IBM's divested Retail Store Solutions business. For the current quarter, this will hurt revenue comparisons by about 1 percentage point for IBM overall and 5 points for its hardware business.

Topeka Capital Markets analyst Brian White expects IBM to meet or slightly miss his fourth-quarter revenue estimate of $28.9 billion, but meet his earnings forecast of $5.23 a share.

"For 2013, we expect muted IT spending, but we believe IBM's high recurring revenue stream and more defensive portfolio will prove attractive to investors," he wrote in a note released on Tuesday. Specifically, the analyst predicts strength in fourth-quarter hardware and software, helping offset the company's services business.

Services accounted for 58% of IBM's total third-quarter revenue. Global Technology Services came in at $9.9 billion, while Global Business Services segment revenue was $4.5 billion.

White expects flat sequential service revenue in the fourth quarter, below typical seasonality, although he's more bullish on the company's software prospects.

"We are modeling Software sales (23%

of revenue) to grow by 38% quarter-over-quarter and above seasonal trends, benefiting from deals pushed out from 3Q12 and into 4Q12," he wrote. White also expects an IBM hardware boost, with its Systems and Technology division, which accounted for 16% of third-quarter revenue, to increase by 50% quarter-over-quarter.

IBM's third-quarter software revenue came in at $5.8 billion, while Systems and Technology sales were $3.9 billion.

The company may provide an update on its long-term financial roadmap. IBM has forecast operating earnings per share of at least $20 by the end of 2015 and predicts that, by that time, growth markets will account for almost 30% of the company's total revenue.

IBM shares rose 0.3% to $194.99 during Monday's trading.

-- Written by James Rogers in New York.

Follow @jamesjrogers

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