Scott11Breeze

Yesterday’s earnings report from International Business Machines (NYSE: IBM) has drawn a lot of media attention, not just because of IBM’s Blue Chip status, but because the company operates in the tech sector, a sector targeted by the recovery bulls as the savior of the U.S. Economy. The company’s worldwide market interests economists as well as they seek signs of global demand.

The IT giant posted $4.8 billion in earnings for the fourth quarter, beating the Street’s estimates, and jumping 10 percent in a per share profit of $3.59. Revenue for the quarter reached $27.2 billion, down slightly from the same quarter last year–yet another disappointing revenue report.

Another piece of the global recovery puzzle may be taken from IBM’s revenue breakdown. Fifty-seven percent of IBM’s revenue is derived outside of the Americas. Considering that Canada and Mexico are part of the Americas, a higher percentage of revenue is derived outside of the United States. With revenue struggling at IBM, where is the emerging global rebound, then?

In all, the report disappointed investors. Earning growth from a defensive focus toward generating more higher-margin revenue and additional cost-cutting measures are getting old on the Street. No growth in the top-line numbers spells trouble for potential earnings growth after fat-cutting and reshuffling resources have been exhausted. Guidance is for the company to earn the higher end of the previously estimated range of $10 to $11 per share for fiscal year 2010. Don’t be fooled by the low-balling gaming.

IBM may be a good stock for the conservative investor taking cover from a false or anemic global recovery. But, the investor seeking superior gains may need to look elsewhere in the sector.