Foolish Forecast: No Blues for Big Blue

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Armonk. Big Blue. International Business Machines (NYSE: IBM). One company, many names -- call it what you want, but one of the biggest boys in high technology is set to report second-quarter earnings Thursday night. Rock out with the first-quarter report, then tune in to Big Blue's new groove. Hmm, hmm, hmm, hmm.

What Fools say:
Here's how Big Blue's Motley Fool CAPS rating stacks up against some of its biggest peers and competitors:

	Market Cap (billions)	Trailing P/E Ratio	CAPS Rating
Microsoft (Nasdaq: MSFT)	$244.4	14.7	***
IBM	$168.9	16.0	***
Hewlett-Packard (NYSE: HPQ)	$102.6	13.5	****
Oracle (Nasdaq: ORCL)	$104.4	19.2	****
Sun Microsystems (Nasdaq: JAVA)	$6.9	11.7	***

Data taken from CAPS on July 14, 2008.

"The market pullback makes this mother of all techs very attractive," says CAPS player OnyongJun. A strong position in plenty of growing markets abroad, combined with a weak dollar, means good things for this global giant.

On the other hand, four All-Star players have made eerily similar bear calls in the past month. Large swaths of IBM's customer base occupy the deeply troubled financial and insurance sectors. mandrake66 doesn't know when "the reckoning will come," but thinks it's a certainty.

What management does:
For all the hullaballoo about a domestic recession, IBM has been turning up the heat on sales with a global approach. Some businesses chase revenues in emerging markets with deep, deep discounts -- but not this one. Witness the remarkably stable margins from top to bottom.

Margins	12/06	3/07	6/07	9/07	12/07	3/08
Gross	41.9%	42.1%	42.2%	42.1%	42.2%	42.5%
Operating	14.3%	14.4%	14.4%	14.5%	15%	15.4%
Net	10.4%	10.4%	10.4%	10.4%	10.5%	10.8%
FCF/Revenue	11.6%	11.2%	12%	12.3%	11.6%	12.4%

Y-O-Y Growth	12/06	3/07	6/07	9/07	12/07	3/08
Revenue	0.3%	4.4%	7%	7.3%	8.1%	9.1%
Earnings	17.8%	15.2%	15.7%	8.3%	10.6%	14%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
It will take a full-scale global recession to put a real dent in IBM's armor. We're supposedly in the midst of a recession, but you wouldn't guess it from the financial trends above. Armonk knows how to grow its traditional software markets and remains open to new opportunities. It is a winning one-two combination that will keep the company rolling for many years yet. That's why this stock has gained around 18% over the past six months, while the S&P 500 market barometer sank by around 12%. Expect more of the same trend-bucking performance this week.