NEW YORK (CNN/Money) - Come Monday, all eyes will be on IBM.

That's not just because the world's biggest computer company, which reports third-quarter earnings after the bell, produced a stunning miss in the first quarter and an unexpectedly strong performance in the second.

It's also because IBM (up $0.15 to $82.35, Research), which makes software and servers, among other things, is considered a bellwether for the tech sector.

When Armonk, N.Y.-based IBM reports, the shares of other tech heavyweights, including Microsoft, Dell, Hewlett-Packard and Oracle, often move on the news.

While few are forecasting that this quarter will be as positive as the second quarter, analysts are still expecting the company to do well. That's in part because analysts expect that the company's cost-cutting plan, which resulted in the layoffs of 15,000 workers, had a continued positive impact in the third quarter.

Wall Street analysts expect IBM to post third-quarter earnings per share of $1.13 and revenues of $21.7 billion, according to Thomson First Call estimates.

"While there may be some concern that [the second quarter] was a 'catch-up' quarter" from the first quarter's shortfall, wrote Bear Stearns analyst Andrew Neff in a research note to clients, "IBM noted that its strength was broad-based with a solid second-half pipeline in place."

That pipeline includes the debut of the latest generation of its mainframe computers, the System z9 series, which the company rolled out on September 16th. Mainframes are used by large corporations and government institutions to process large applications.

UBS analyst Benjamin Reitzes wrote in a recent research note that it appears the company's hardware business saw a pick-up in shipments in the last two weeks of the quarter, after the zSeries debuted.

But Banc of America Securities analyst Keith Bachman wrote in a research note that he thinks that before the zSeries debuted, mainframe shipments for the quarter dropped sharply – he estimates 20 percent -- as customers waited for the new line to debut late in the quarter. Because of the new line, he is expecting a strong fourth quarter for mainframes, however.

The most watched aspect of IBM's business is its services and software division, which accounts for more than half of the company's total revenues. One figure analysts will watch closely is the services division's contract signings number, which reflects the amount of new business IBM was able to attract. Estimates for the contract signings IBM inked in the third quarter have mostly fallen in the $11 billion to $11.9 billion range.

Last quarter, IBM's contract signings number was a huge, and pleasant, surprise to the Street. Analysts' estimates for that number ranged between $12 billion and $14 billion; the actual number came in at $14.6 billion. But the third quarter is unlikely to produce such a home run, said Richard Williams, an analyst at Garban Institutional Equities.

"There's a fair bit of seasonality for software companies," said Williams. "The fourth quarter and second quarter are the biggest; the third quarter stinks because Europe is on vacation."

Prudential Equity Group analyst Steven Fortuna has a sunnier outlook on the services division, writing in a note to clients that he thinks it will be one of the highlights of the quarter, along with earnings and the strength of the services pipeline, or deals the company has in the works. He added that he believes "a sizable deal" may have been in the works for the third quarter but was not completed.

Because it is trading at 16.5 times 2005 estimates, the stock, which closed at $82.20 Friday, looks relatively cheap.

But Garban's Williams thinks these numbers aren't as straightforward as they may seem.

"Even though these numbers on an absolute basis look cheap, we view it as not being as cheap as it looks," said Garban's Williams, who has a "sell" rating on the stock. "With inflation climbing, that's going to create P/E compression, and we see slowdowns that suggest forward earnings and revenue growth will be compressed."

Williams also takes issue with what analysts have projected as a roughly 10 percent forward growth rate for the company for 2006.

"I question whether they can achieve that," he said. "That assumption is heroic given what we are seeing across the whole channel, which is decelerating growth rates across the whole [enterprise software] group."

But some maintained a more positive outlook. Both Citigroup and Credit Suisse First Boston upgraded the stock this week, to buy from hold and to outperform from neutral, respectively, and Bear Stearns maintained its "outperform" rating on the stock.

"We still see IBM attractively valued at a 13 percent discount to S&P multiple," wrote Bear Stearns analyst Andrew Neff.

Banc of America Securities analyst Keith Bachman said he feels IBM is an attractive buy for investors now because the company's valuation is compelling, while sentiment is still poor. Prudential analyst Fortuna wrote that he feels IBM will benefit from "a greater confluence of growth catalysts than at any time in recent history," including a reorganization of the services business and the elimination of the company's personal computing business.

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Garban's Williams does not own shares in IBM, and his firm has no banking ties to the company. The other analysts quoted in this story do not own shares of IBM, but their firms have banking ties to the company.