International Business Machines Corp. (NYSE:IBM) is scheduled to release its third quarter financial results for the third quarter of the current fiscal year after the market closes on Wednesday, October 16.

IBM

IBM expected to deliver in-line results

Brian White, analyst at Cantor Fitzgerald Equity Research, believes that International Business Machines Corp (NYSE:IBM) will deliver an earnings per share (EPS) that is in line with the research firm’s estimate of $3.93 (Street $3.95). However, the analysts projected that the company will slightly miss its revenue estimate at $24.7 billion (Street $24.8 billion).  The research firms’ estimate represents a 1 percent QoQ decline and is in line with the six-year average in the previous September quarters.

The analysts also expect that the management of International Business Machines Corp (NYSE:IBM) will be cautious in delivering its results for the quarter given its broad presence in the information technology (IT) industry.

White is convinced that investors will concentrate their attention on the third quarter earnings results of International Business Machines Corp. (NYSE:IBM) on the implications of the technology industry in its entirety.

IBM more cautious on its hardware business

The analysts projected that the company will report growth in its services and software business, but the rest of its segments were weak. According to White, IBM’s management will be more cautious on its hardware business. He expects the company to deliver a 4 percent QoQ growth in Services for the third quarter and its Systems Technology to decline by 11 percent, below historical levels.

Looking forward, White estimated that International Business Machines Corp. (NYSE:IBM) will be able to generate a revenue of $28.3 billion, below the Street’s estimate was at $29.1 billion. According to him, his forecast was reasonable and in line with seasonality over the past six years. He described the Street estimate as aggressive.

Increase in operating EPS

In terms of EPS, White projected that the company will be able to generate $5.94, which he believed achievable. He noted that IBM increased its operating EPS outlook from $16.70 to $16.90 for 2013 during its second quarter earnings call in July. He said, “Despite our expectations of near-term IT spending softness, we remind investors that IBM has delivered a 16 percent EPS CAGR over the past five calendar years and has grown quarterly EPS YoY every single quarter since 3Q:04.” The Street’s EPS estimate for IBM was $6.08.

White recommended a Buy rating with a $220 price target for the shares of International Business Machines Corp (NYSE:IBM). The stock is trading around $185.67 a share, up by nearly 1 percent as of this writing.