International Business Machine Corp.'s (NYSE: IBM) headline earnings report looked strong but analysts tore CFO Mark Loughridge apart in last night's conference call.

Global Business Services, which reported good bookings for short-term contracts, missed big on long-term bookings. The long-term contract business has been viewed as a good indicator of IBM's future results. If these long-term bookings are weak, IBM's future revenue could be weak.

It was clear from the call that IBM is having trouble signing long-term services contracts for reasons not clearly stated during the call. One must suspect this business remains very competitive and they cannot sign profitable deals.

In addition, there were some concerns about potential margin compression. While IBM reported good gross margin improvement, SGA was up 10% and R&D was up 8% for the quarter; there is only so much cutting the company can do at the gross margin line. When asked about this trend, Loughridge was evasive.

Further, IBM provided little, if any, guidance.

Also, there are concerns about IBM's linkage to SAP AG (NYSE: SAP), that missed big, as well as the success Oracle Corp. (NASDAQ: ORCL) is having with its vertical acquisition and middleware strategy.

All told, Loughridge pitched the company, whether intentionally or not, as a company with a healthy balance sheet that generates a lot of cash. For now, IBM is a dividend play at best. Oracle seems the better choice for investing in the enterprise software space.