IBM Q3 Earnings Preview

Analyst estimates for IBM Corp.'s (NYSE:IBM) third quarter have been rising over the last month, with the consensus now at $2.38 per share. The company reports earnings on Thursday.

"IBM has improved its gross profit margin in 19 of the last 20 quarters," reports iStockAnalyst. "That shows it has aggressively controlled costs while finding ways to squeeze more money from its products. Positive gross margin trend is likely to have continued in the September 2009 quarter as well."

"IBM broke out on Friday to new highs after Barclays Capital raised its price target to $140," points out John Henderson, an independent trader who writes The Inflection Point column on Seeking Alpha. "We are long IBM and expect to see its P/E multiple expand as investors begin to value the tech giant based on forward 2010/2011 estimates."

In July, IBM agreed to buy predictive analytics software maker SPSS Inc. for $1.3 billion in cash and assumed debt to expand its information-on-demand software business. As The Deal's Peter Moreira pointed out at the time of the announcement, Big Blue has been buying up software companies, making half a dozen such purchases in 2008, including Transitive Corp., which makes virtualization technology, and French software company Ilog SA. - Mary Kathleen Flynn