True Blue and Yahoo! too. 

IBM and Yahoo! lead a big week for tech earnings next week. Here's what to expect.

January 14, 2005: 5:19 PM EST
By Paul R. La Monica, CNN/Money senior writer

NEW YORK (CNN/Money) – At first blush, you wouldn't think that IBM and Yahoo! have much in common.

One's an "old" tech company based in a sleepy suburb of New York City with a projected long-term earnings growth rate of just 10 percent.

The other's a sexy Internet search play headquartered in Silicon Valley with a long-term growth rate of 30 percent.

To paraphrase Marie and Donny Osmond, IBM's a little bit country and Yahoo!'s a little bit rock and roll.

But both stocks have been flying during the past few months.

Shares of IBM (Research) have gained more than 15 percent since last summer's market lows while Yahoo! (Research) has surged nearly 30 percent.

The two companies will report their fourth quarter results after the closing bell next Tuesday. And investors are hoping that these two bellwethers can wow the market the way that Intel (Research) and Apple (Research) did this week.

Here's what investors should be keeping an eye on.

Dollar's decline=sales divine?
IBM, like most large multinational companies, has benefited from the dollar's decline. Nearly 57 percent of Big Blue's total sales in the third quarter came from outside the Americas. And IBM said in the third quarter that the weak dollar helped boost revenues by four percentage points.

Favorable currency exchange rates should help lift sales again. Analysts are predicting that IBM will report revenues of $27.4 billion for the quarter, up 6 percent from a year ago.

Although the weak dollar probably won't play as large a role in influencing Yahoo!'s results, currency should be a factor since the company's international business is growing rapidly. In the third quarter, 28 percent of Yahoo!'s sales were from outside the United States, compared to just 16 percent a year earlier.

Yahoo!'s revenue is expected to come in at $754 million, up 48 percent year over year. These figures exclude traffic acquisition costs (TAC), the advertising revenue that Yahoo! shares with affiliates using the company's sponsored search services.

Watching their backs
IBM is in the process of exiting the cutthroat PC business. After years of doing battle with the likes of Dell (Research) and Hewlett-Packard (Research), Big Blue decided to sell the money-losing unit in December.

But IBM still faces tough competition in the more profitable areas of software and services.

IBM has to contend with the likes of Microsoft (Research), Oracle (Research) and SAP (Research) in software.

And in services, HP and Accenture (Research) are gaining ground.

So investors will be eager to see if competition is taking a toll on profit margins in these divisions, which would hurt the bottom line. Analysts expect IBM to report earnings per share of $1.76 for the quarter, up 13 percent from a year ago.

For Yahoo!, competition doesn't seem to be that big of a concern -- yet. The sponsored search advertising is booming and that should lead to strong results for Yahoo! The company is expected to report earnings of 11 cents in the quarter, up 83 percent from the same period last year.

Still, investors can't ignore the threats posed by Google (Research) and Microsoft's MSN. A report released Thursday by Keynote Systems about search engine customer satisfaction showed that Google still ranks number one. And although Yahoo! gained some ground on Google in the user survey, so did MSN.

Investors will be hoping to see Yahoo! beat consensus earnings estimates for the quarter in order to prove that it is not just merely benefiting from a strong overall advertising environment but that it is actually edging out its competition.

Give me guidance
What Wall Street really wants to see from IBM and Yahoo! is evidence that momentum will continue in 2005. The solid first quarter guidance from Intel and Apple was what truly impressed Wall Street, after all.

For IBM, it might be enough for the company to simply affirm revenue and earnings guidance for the first quarter. That's what it did for the fourth quarter when it reported third quarter results in October. Analysts are expecting sales of $23.5 billion and earnings of $1.08 a share.

With Big Blue, the focus will be more on the tone, i.e. whether or not company executives say on IBM's conference call that corporate tech spending is improving.

It won't be that simple for Yahoo!

Because it's a more richly valued stock, trading at about 72 times 2005 earnings estimates compared to IBM's P/E of 17, the onus on Yahoo! will be to significantly lift its sales outlook. (The company typically doesn't give earnings guidance). Analysts are forecasting first quarter sales, excluding TAC, of $770.9 million for Yahoo!