IBM(IBM)competes with Oracle(ORCL) and Red Hat(RHT) in the middleware software market.

IBM's advanced computing device Watson, "designed to quickly answer complex questions with pinpoint precision", recently defeated human competitors on the popular TV show Jeopardy. Watson, developed by IBM's scientists over the last three years and named after IBM's founder Thomas J. Watson, Sr., has taken data analysis capabilities to a new level.

International Business Machines (IBM), whose colleagues include Hewlett-Packard (HPQ) and Microsoft (MSFT), did not disappoint with its first-quarter report, posted yesterday after the market close. However, Wall Street seemed disappointed. I'm not sure why; perhaps it's just a case of profit-taking.

In any case, the after-hours selling I saw on Monday wasn't too bad. At one point, shares were off by 2.8% -- not the worst post-earnings reaction I've ever seen. And I can tell you this: it doesn't dissuade me from feeling bullish on Big Blue.

I am looking forward to International Business Machine's (IBM) Q4 earnings report, which is scheduled to be released after the close of today's session. No, I don't have a trade going on with the shares, but I have a feeling the numbers are going to be pretty good for Big Blue. When I covered the company's Q3 data back in October, I found myself impressed. I firmly believe the fundamental strength is set to continue.

According to Earnings.com, IBM, whose colleagues include Hewlett-Packard (HPQ) and Microsoft (MSFT), is expected to deliver around $3.47 per share for the bottom line. Last year at this time, the company made $3.28 per share. So, investors might see an increase of around 6% in the metric.

Hewlett-Packard (HPQ), the famous maker of printers and PCs, and a colleague of entities such as Microsoft (MSFT), Dell (DELL), and International Business Machines (IBM), issued Q4 results on Monday after the end of the trading day. Revenues didn't impress me, as sales saw a decline of 8%. Net income, however, was better. On an adjusted basis, earnings per share increased 11% to $1.14.

Also doing well was the operating margin. The adjusted metric increased 170 basis points during the quarter. The annual statement of cash flows should look good to any long-term shareholder. Management still had cash left over from operations after share repurchases, dividend obligations, and capital spending.

Yahoo! (NASDAQ: YHOO) will be reporting Q3 data after the bell today. Is the market excited over the Internet portal's prospects? Well, judging by the price action I'm seeing on my screen right now, I'd have to say the answer is a definite no. The stock is down 1.7% as I write this in early afternoon trading.

According to Earnings.com, Yahoo!, whose colleagues include Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG), is expected to say it made 7 cents per share in the third quarter. That won't be so great, since it will represent an earnings decline compared to last year's income stat. Of course, we should remember that it won't be just about the earnings per share. We'll have to hear what management has to say about future prospects.

International Business Machines (NYSE: IBM) reported Q3 results after the bell on Thursday. Net sales decreased 7% when compared to the year-ago period. Okay, that doesn't sound like a great start. Wait, though, because things are about to get better from here.

Sales actually increased 1% on a sequential basis. Net profit on a dollar basis went up 14%. Net margin improved. And on a per-share basis, net income jumped 18% to $2.40. According to our earnings preview, this was two pennies ahead of analyst projections.

Salesforce.com (NYSE: CRM) has a new champion: Dell (NASDAQ: DELL). The PC manufacturer is promoting the online sales force-enablement platform as a way to gain access to the hefty sums available in the technology services business. The deal would give Salesforce.com access to Dell's clients in the small and medium-sized business categories. Dell would sell Salesforce.com products and provide consulting services to help clients integrate the solution with their other enterprise applications. The dollars and cents of this union weren't disclosed.

Dell sees the margins of the services business and wants a piece of the action, particularly since the PC sector is low margin. Also, sales have been hit pretty hard as a result of the financial crisis. With PCs accounting for 60% of Dell's top-line, a bit of diversity isn't a bad idea. Currently, services account for only around 10% of Dell's sales.

Hewlett-Packard (NYSE: HPQ), a technology company whose colleagues include International Business Machines (NYSE: IBM), Microsoft (NYSE: MSFT), Dell (NASDAQ: DELL) and Apple (NASDAQ: AAPL), issued its third-quarter numbers on Tuesday after the bell. Relatively speaking, the results weren't bad: top-line sales dropped 2%, and adjusted earnings per share came in at 91 cents, a penny ahead of expectations, as DailyFinance reported.

Hewlett-Packard is obviously trying to keep costs and expenses under control. In fact, the company reported its adjusted operating margin went up. And its adjusted earnings per share actually increased 6% compared to last year's performance.

Microsoft Corporation (NASDAQ: MSFT), a company in the same competitive league as Apple, Inc. (NASDAQ: AAPL), Google, INc. (NASDAQ: GOOG), Yahoo! (NASDAQ: YHOO), and International Business Machines Corp. (NYSE: IBM), posted its Q4 earnings release after the bell on Thursday. As I was writing this paragraph, shares of the software giant were trading down over 6% in the after-hours session. Looks like the market was disappointed.

To be certain, the results weren't great (of course, no one was expecting them to recall the company's growth story of yesteryear, I'm confident about that, let me tell you). Sales were down 17%. Operating income on a dollar basis dropped 30%. And, on a reported basis, Microsoft's per-share profit, calculated out to be 34 cents, declined 26%. On an adjusted basis, adding back 4 cents for a few items, earnings came in at 38 cents per share. According to my earnings preview, that beat estimates by two pennies.

International Business Machines (NYSE: IBM) posted an excellent earnings report on Thursday. Yes, the bottom-line results did beat analysts' projections. According to Earnings.com, IBM was supposed to do only $2.02 per share for the second quarter. Big Blue actually did much more than that: try $2.32 per share.

Okay, beating analysts is always great, but it's even better when there's legitimate earnings growth behind the beat. Often during the recession we've witnessed companies go beyond estimates but actually post year-over-year declines in profit. That's always a mixed bag, and you have to dig through the release to figure out exactly what's going on. Well, the cool thing with IBM is that the $2.32 per-share figure represents double-digit growth of 18%.

Infosys Technologies (NASDAQ: INFY) increased its first quarter profits by 17% by tapping new markets and wrangling in 27 new clients, according to the Financial Times. The second-largest software services exporter in India, Infosys even scored some major clients, such as Waitrose, a top-shelf food retailer in the United Kingdom. Tough economic conditions can tend to favor companies that provide outsourcing services -- as well as consulting services with high, easily justifiable returns on investments (ROIs).

Nonetheless, this is a competitive space, and Infosys did caution that IBM (NYSE: IBM), Accenture (NYSE: ACN) and Hewlett-Packard (NYSE: HPQ) will be formidable global foes. With the announcement, Infosys increased the lower end of its forecast for the year, expecting revenues to fall in the $4.45 billion to $4.52 billion range.

"Overall, we believe quality technology stocks offer above-average growth potential and attractive valuations," says Gregory Dorsey.

In Stephen Leeb's The Complete Investor, he explains, "International Business Machines(NYSE: IBM) has plowed ahead despite a daunting economic and business environment; we are adding the stock to our Growth & Income Portfolio."

"For prudent investors in this challenging economy, most of the major technology companies are financially solid, often with little or no debt and lots of cash on their books. This makes them good long-term vehicles even if the economy remains off the rails for a prolonged period.

"What can get this market going again?" asks Chuck Carlson. In The DRIP Investor he says, "It's helpful to understand what stocks within the Dow need to do well for the index to do well."

"Not surprisingly, IBM (NYSE: IBM), the highest-priced stock in the Dow, carries the greatest weighting at more than 9% of the index. Obviously, with such a heavy weighting in the index, IBM will need to be a decent performer for the Dow to do well going forward.

"And when you total up the exposure of IBM with the other tech stocks in the Dow - Microsoft (NASDAQ: MSFT), Intel (NASDAQ: INTC), and Hewlett-Packard (NYSE: HPQ) - the total tech weighting in the Dow is 16%. Thus, tech stocks matter to the Dow, so it is diffcult to see the Dow sustaining a move upward without a nice rebound in the tech sector.

This post is part of a report entitled "Six-pack of technology favorites." You can read about the other top tech stock picks here.

"For more than a decade, International Business Machines (NYSE: IBM) lived up to its reputation as a slow-growing, stodgy company," says Richard Moroney.

The editor of the blue chip advisory, Dow Theory Forecasts, contends, "But over the last 12 months, the picture changed. Strong operating momentum is now propelling genuine operational growth despite U.S. economic weakness."

"Acquisitions and cost cuts have accounted for most of IBM's growth in recent years. In the 10 years ended 2006, sales increased at an annualized rate of less than 2%, and the company lost both market share and in?uence.

"However, sales growth has accelerated in each of the last three quarters, and per-share pro?ts have risen at least 23% in each period. Consensus estimates, trending upward over the last month, project per-share-pro?t growth of 24% in 2008 and 11% in 2009.

"A broad business mix has helped the company keep growing during the economic slowdown. IBM may still be best known for its hardware, but the company's strength over the last year has stemmed from the services and software businesses, which tend to be less economically sensitive than hardware.

"Hardware accounted for about 18% of sales in the six months ended June, while services represented 58% and software generated 20%. Financing operations brought in most of the last 4%.

"While the current economic climate has pinched the consumer, companies are still investing heavily in new technology. IBM's products and services help customers improve ef?ciency, productivity, and security, which in turn can reduce costs. In the six months ended June, IBM's revenue rose 12%, while per share-pro?ts jumped 34%. Revenue from services increased 17% in the six-month period.

With concerns over recession, turmoil in the financial sector, fear of rising rates, high market volatility and a rising aversion to risk, many investors have been avoiding technology stocks.

Investors have feared that these economic headwinds will dampen both consumer spending for technology products and reduced capital expenditures for technology in the corporate sector.

Despite these concerns, some of the newsletter industry's leading advisors are looking beyond the current malaise and seeing longer-term value in some of the tech sector's leading players. They believe that much of the "bad news" is already reflected in the price of the shares, with little recognition being given to their longer-term potential.

For those willing to go against the crowd and buy, as they say, "while blood is running in the street," we offer a six-pack of technology stocks that the some top advisors considers to be among their favorite ideas.