BY Dennis Hobein:

Contributor, Stock Traders Daily

Real Time Trading Reports:  Included are detailed trading reports designed to help investors realize opportunities in these companies.  The reports are linked to the stock symbols in the article below.

 Performance - Click Here

(La Jolla, CA)  The pace of fourth quarter earnings releases is about to pick up steam as there are several widely followed names in the technology space on the calendar for the week of Jan. 18. Among them, IBM (NYSE: IBM) is one that will garner a significant amount of attention that also has the potential to move the broader markets. Its results will provide further insight as to whether enterprises are feeling more optimistic (or still guarded) about the economic recovery, and thus, if they are opening up their IT budgets. As a reminder, to learn more about the technical aspects of IBM or the other stocks listed in this article, simply click on the ticker symbols to access our free trading reports.

Cost Cutting Has Driven EPS Beats For Big Blue

On Jan. 19, after the market closes, IBM will issue its fourth quarter numbers and the market will be looking for the company to report its ninth straight EPS beat. To do so, its EPS must increase by 6% or better from 4Q08 to beat the Street’s estimate of $3.47. Undoubtedly, the string of better-than-expected earnings has been impressive, but its worth noting that the bottom-line performance has been a result of superior cost-cutting abilities rather than revenue growth. Up until this point, the market has been satisfied with the excellent operational efficiencies that IBM has achieved, demonstrated by the 56% gain in shares from the March ’09 lows. This performance is in spite of four consecutive quarters of sales declines, while many other tech bellwethers have turned the corner to report sales growth. With that said, IBM may not be able to get away with another weak quarter on the top-line. Analysts are currently anticipating revenue to be approximately flat with last year, estimating $26.9 bln in sales. A small beat would bump IBM’s revenue back in positive territory which could also be a psychological lift for IBM and its shareholders. For traders interested in entering a trade prior to its earnings release, we suggest reviewing our free trading report on the stock first.

Trends Towards Virtualization and Cloud Computing Driving F5 Networks

Back in mid-November, Investors Business Daily ran a column highlighting F5 Networks (Nasdaq: FFIV) as a company that is at the center of an important trend in technology – cloud computing. Simply stated, cloud computing is the practice of putting IT applications on the Internet, rather than on a server or on other storage equipment. The result is that it saves companies money, obviously an important factor, especially in today’s economy. FFIV’s networking products help applications run more efficiently and quickly, even as they move away from end users, and the adoption has been strong. This is reflected in its recent quarterly results. Over the past two quarters, it has topped the Street’s revenue and earnings expectations. EPS growth has been very impressive at 108% last quarter and 74% in its fiscal 3Q09.  Also, unlike IBM, sales have been growing – albeit modestly at 2.3% in 4Q09. Leading up to this earnings report, the stock has been on a tear, up 23% since Oct. 21 (its last earnings report). To keep momentum going, FFIV will not only need to beat the 1Q10 estimates of $0.49 and $185.5 mln, but it will also likely have to issue upside 2Q10 guidance. Its results are due out on Jan. 20 after the close.

Seagate Technology Benefitting From Stable Pricing, Solid Demand

Hard drive manufacturer Seagate Tech (Nasdaq: STX) is set to report its 2Q10 earnings results on Jan. 20 after the market close. Current consensus calls for EPS of $0.65 and revenue of $2.84 bln, which would represent a vast improvement over last year’s second quarter results of ($0.23) and $2.27 bln. The drastic turnaround is a function of a profound turnaround in the disk drive and hard drive industry due to strong netbook and notebook sales, as well as a pickup in PCs. Additionally, disk drive inventory levels are believed to be historically low which is supporting solid pricing trends. The two main players in this space – STX and Western Digital (NYSE: WDC) – have enjoyed massive stock gains over the past year, up 287% and 235% respectively. With that type of move, one would believe that valuation would be an issue. However, STX still has a 1-year forward P/E of just 7.4x. To learn more about risk control measures regarding STX and WDC, please see the free trading reports.

Looking to get in ahead of earnings? Check out dynamic real-time trading reports published by Stock Traders Daily CEO, Tom Kee Jr., with a Free Trial. In 2009, Kee's Position Trades were up +56% on 4 trades.

.