IBM $194.53 - New York symbol IBM

IBM $194.53 (New York symbol IBM; Shares outstanding: 1.1 billion; Market cap: $214.0 billion; TSINetwork Rating: Above Average; Dividend yield: 1.8%) is down from $210 a share in mid-October after it reported revenue of $24.7 billion in the quarter ended September 30, 2012. That’s down 5.4% from $26.2 billion a year earlier and short of the consensus estimate of $25.4 billion.

The slow global economy is hurting demand for IBM’s mainframe computers, services and software. That’s why its revenue fell.

However, the company’s ongoing cost cuts and productivity improvements pushed up its earnings before one-time items by 10.4%, to $3.62 a share from $3.28. That beat the consensus estimate of $3.61.

Like most big tech stocks, IBM needs an improved global economy to post significantly higher revenues. But it is keeping its research spending high, at $1.6 billion, or 6% of its revenue in the latest quarter.

These investments are letting IBM continue its expansion in high-growth areas, such as cloud computing and analytics software, which helps businesses track consumer purchasing and other data. That positions it for gains even if the economy recovers slowly.

The company still expects to earn at least $15.10 a share in 2012. The stock trades at just 12.9 times that estimate. The company also aims to increase its earnings to $20.00 a share by 2015.

IBM is still a buy.

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