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Earnings Preview: IBM to post 1Q results Thursday

NEW YORK (AP) -- IBM Corp. reports its first-quarter results Thursday after the market closes and is expected to show earnings growth fueled by its higher-margin software and technology services businesses.

WHAT TO WATCH FOR: IBM has grown its earnings each quarter in the past decade, a streak that likely extended through the first quarter of this year. The company's business has been stable because many of its customers sign long-term contracts that guarantee regular revenue, even when the economy is tough.

It also helps that IBM no longer has a direct connection to the personal computer industry, where a sales slump has been hurting the makers of microprocessors and desktop and laptop computers. Last week, news that PC sales suffered an unprecedented decline in the first quarter slammed shares of tech bellwethers Microsoft Corp. and Hewlett-Packard Co. since their fortunes are closely tied to the personal computer market.

Sterne Agee analyst Shaw Wu says he expects a "resilient quarter" from IBM though he's concerned about what he called "cautious" data from technology companies such as Oracle Corp. and F5 Networks Inc. Oracle recently posted quarterly results that were below Wall Street's expectations and F5 gave a weak outlook. Wu expects "a decent quarter with slightly light revenue" from IBM and earnings per share above Wall Street's consensus expectations.

BMO analyst Keith Bachman also says he thinks IBM's revenue "could be a little light" due to lower software and services revenue during the quarter.

Currency fluctuations, which can translate to fewer dollars IBM makes on overseas sales, could also hurt the quarter's revenue.

WHY IT MATTERS: IBM is the world's largest technology-services company. Its results provide a gauge of businesses' appetite for technology spending.

WHAT'S EXPECTED: Analysts, on average, are expecting adjusted earnings of $3.05 per share on revenue of $24.67 billion, according to a poll by FactSet.

LAST YEAR'S QUARTER: Excluding special items such as acquisition costs and pension-related expenses, IBM earned $2.78 a share in last year's first quarter on $24.67 billion in revenue.