IBM grows profits and expands margins in second quarter

I wish, however, I could say that the report was without flaws. Unfortunately, here's the bad part: sales took a big fall, dropping 13%. Yes, currency effects need to be looked at, but I'm afraid you won't get a lot of satisfaction out of such context, because even after forgetting the dollar effect, revenues dipped 7%.

IBM may have had problems with sales, but the company is keeping the bottom line healthy and is holding its own in a complex tech industry that includes Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), and Hewlett-Packard (NYSE: HPQ). In fact, take a look at the margins. The gross, pre-tax, and net margins all went up during Q2. So did full-year guidance. And the free cash flow was pretty, too (even though it saw a bit of a decline).

I really, really wish revenues could have been either flat or down a lot less than they were. However, I'm not going to make a huge issue of it. IBM is a great blue-chip stock that should be held for the long term. Shares closed higher by well over 4% on Friday. Granted, 4% may not sound like a lot in a relative sense, but take a look at the volume of shares traded. According to AOL quotes, over 20 million shares exchanged hands. The 30-day norm is closer to 7.5 million stubs. The market might be signaling its support for the company's prospects.

I'd wait for a little retreat in the share price before entering IBM. Otherwise, you can call me a bull on this one. And for more suggestions on how to buy IBM if you are so inclined, check out Joseph Lazzaro's recent analysis of Big Blue.

Disclosure: I don't own any company mentioned; positions can change without notice.