IBM (NYSE: IBM) is set to report earnings after today’s close.  Big Blue is expected to post $1.82 EPS on $25.92 Billion in revenues, according to First Call.  It is expected to post $1.95 EPS and $26.07 Billion in revenues for next quarter, and it is expected to post $8.56 EPS on $107 Billion in revenues for Fiscal Dec-2008. If the company gives earnings guidance way out for 2009, those estimates from First Call are expected to be $9.59 EPS on $112.15 Billion in revenues.

Interestingly enough, the company’s forward earnings could be different because it has been retiring so much stock via share buybacks.

Another area that has been helping IBM is that as of last quarter itsaid some 65% of its revenues were generated from outside of the U.S.That means you’ll have to watch its "currency adjustments" closely tosee how much that added to earnings on dollar terms. 

The company last quarter already stated, "We feel good about the rest of the year."

Its total gross profit margin was 41.5% in Q1-2008, up from 40.2% inQ1-2007.  It also spent some $2.7 Billion buying back stock in Q1-2008and it had retired 120 million shares via buybacks since the start of2007.  In February it committed to buying back $12 Billion in all of2008.

After adjusting for currencies, the company said its total globalservices backlog was $118 Billion (flat sequentially and up $2 Billionfrom Q1-2007).  This backlog is perhaps the most important measure welook at outside of its internal metrics such as taxes and margins.  Asof last quarter, that backlog is technically more than an entire year’sworth of revenues.

Options expire tomorrow and it appears that options traders are bracedfor up to a $5.00 or $6.00 move in either direction.  The averageanalyst price target is slightly above $137.00, and its 52-week tradingrange is $97.04 to $129.99.

Jon C. Ogg
July 17, 2008

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