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IBM Earnings Beat Street--Big Time

This is the third straight blow-out quarter for IBM, and it looks like it's only going to get better from here. This quarter, by any stretch, is a knock-out.

IBM reports $1.98 on $26.8 billion in revenue, when the Street was anticipating $1.82 on $25.9 billion. I mean, you can expect smaller, more nimble companies to blow past the Street; certainly companies where a dime here or there, based on shares outstanding or revenue generated, is not that big of a deal.

But this is IBM, where a dime here or there is huge money, and a few percentage points translate into hundreds of millions of dollars. IBM beats, and beats big.

But this good news story just keeps on giving. Minutes after reporting this news, the company offered up a revision to its full year earnings per share and the bump up is significant. Remember, IBM did this at the conclusion of its first quarter, taking EPS estimates up from $8.25 to $8.50.

That encouraged analysts to bump up their own estimates to $8.56, which is where expectations sat today. IBM repeated its story--never an old one for investors--by doing the same thing again today: now expecting full-year EPS of $8.75, a big increase from the $8.50 and huge when you consider where these expectations were just a couple of quarters ago.

Taking a look at the company's individual business units, you'll see where this strength is truly coming from: The company's hardware business beat the high end of estimates by $300 million; its services business soared, despite those macro-economic worries, with tech services jumping 15 percent, business services increasing 18 percent, software gained 17 percent, and services signings increase 18 percent.

And just an aside as you look at the spate of tech earnings these last few days: earnings misses can not be underestimated. They're a problem; they're an issue; but they speak to problems internal at these companies reporting them and shouldn't be used as a metric to determine the strength or weakness of the broader economy. Fact is, Intel,IBM, Microsoft, Googleall beat on the topline. And that means customers are spending. And that means concerns over a recession, or a global economic slowdown, just isn't materializing. It's not. Guidance from all these guys is strong. EPS continues under pressure, but customers are buying. And not just a little. A lot. Fundamentals in the businesses they play in still seem stable, if not strong.

I know, a fading silver lining, especially if you're a Google investor. But hey, it's a silver lining, nonetheless.

Questions? Comments? TechCheck@cnbc.com

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