What crisis? IBM spoils the bears' day with good Q3 news

Usually when a company these days gives advance warning to the press about earnings numbers that aren't due for another week, it's to help diffuse a negative backlash. Not this time, as IBM handed the market a rare gift.

In an SEC filing this morning, IBM went out of its way to bring good tidings of great earnings for a market that could really use a little Christmas cheer even two months early. Total revenues for the third quarter of this year for the company will be up 5% annually to $25.3 billion; and with margins rising, its net income will likely be up as much as 20% on the year, to $2.8 billion.

Back in April, analysts were expecting IBM's full-year earnings for 2008 to approach $8.50 per share, and that was considered good. This morning, IBM told the SEC it expects to reach $8.75 per share by the end of the year, and re-affirmed its confidence in guidance numbers to support that figure.

But the stock market has been wearing blue for a different reason all this week; and even as IBM's great news was heralded, it could do little to put the skids on a multi-day selloff. By 11:00 am EDT, the Dow 30 Industrials had traded as low as 200 points below the previous day's close, having lost 191 points the previous day, though there was a bit of a rally by 11:15, tapering losses to just over 100 points.

The fact that IBM stock was trading down a half-point at just over $90 per share by late morning could even be seen as bucking the trend.

The other surprising news from IBM, which may be confirmed during next week's regular conference call, is how well it's doing in the services field. That could be what's expanding its overall margins. Services is where IBM's competitors aren't faring all that well; just last week, after HP announced it would be gradually exiting its security services business, leaving behind Identity Center customers, IBM found itself in a race with Novell to pick up those customers.

In a statement last week, IBM Tivoli general manager Al Zollar took a different approach than Novell, capitalizing on HP customers' anger and resentment rather than playing the white knight. "HP's decision to throw in the towel on its identity and access management software line," Zollar said, "has left a void for customers. Obviously security software is a critical linchpin for protecting a company's global assets and reputation. IBM is committed to delivering a comprehensive portfolio of security software and services."

Now, if only IBM had an "insecurity" solution for the rest of the market.