International Business Machines Corp.

INTERNATIONAL BUSINESS MACHINES CORP. $189 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $207.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.ibm.com) continues to add to its software expertise.

The company recently paid an undisclosed sum for U.K.-based Daeja Image Systems. This company’s products make it easier to view digital images in hundreds of different computer-file formats, without first installing the program that created the original image. Daeja’s products also help businesses mask sensitive information on computer images, and restrict access to certain files.

IBM is a buy.
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CONAGRA FOODS INC., $31.88, New York symbol CAG, fell 5% this week after the company warned that weaker-than-expected demand for its brand name foods, such as Hunt’s ketchup, Peter Pan peanut butter and Slim Jim meat snacks, is hurting its earnings. As a result, the company now expects that it earned $0.37 a share in the first quarter of its 2014 fiscal year, which ended August 31, 2013. This forecast excludes unusual costs related to its recent purchase of Ralcorp Holdings, the largest maker of private label food in the U.S. Even so, ConAgra’s forecast is well below the consensus estimate of $0.45 a share. The company is now adjusting its pricing and marketing strategies to spur its sales, but lower ingredient costs and savings from the Ralcorp merger will still let it meet its debt repayment goals in fiscal 2014 and 2015....

INTERNATIONAL BUSINESS MACHINES CORP. $197 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $216.7 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.ibm.com) continues to enjoy strong demand for its software, as it helps businesses analyze large amounts of data and improve their efficiency....

INTERNATIONAL BUSINESS MACHINES CORP., $193.54, New York symbol IBM, reported lower second-quarter earnings this week, although they still beat the consensus forecast. The company also raised its earnings estimate for all of 2013. In the three months ended June 30, 2013, the company earned $3.2 billion, down 16.9% from $3.9 billion a year earlier. IBM spent $3.6 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 12.9%, to $2.91 from $3.34. If you exclude unusual items, such as costs to integrate recently purchased companies, IBM’s per-share earnings would have risen 8%, to $3.91. That easily beat the consensus forecast of $3.77....

INTERNATIONAL BUSINESS MACHINES CORP. $197 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $216.7 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.ibm.com) continues to enjoy strong demand for its software, as it helps businesses analyze large amounts of data and improve their efficiency. That’s helping IBM offset slow sales of its mainframe computers.

IBM is a buy.

TEXAS INSTRUMENTS INC. $39 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.1 billion; Market cap: $42.9 billion; Price-to-sales ratio: 3.5; Dividend yield: 2.9%; TSINetwork Rating: Average; www.ti.com) plans to stop making chips for cellphones due to intense competition from larger chipmakers. Instead, it is shifting to analog chips, which convert sounds and temperatures into digital signals that computers can understand. While not as profitable, sales of analog chips are much less volatile than wireless chips.
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ALCOA INC., $8.10, New York symbol AA, is closing smelters and cutting costs in response to declining aluminum prices. It also continues to expand its more profitable engineered-products business, which makes wings, fasteners and other components for the aerospace and automotive industries. In the three months ended June 30, 2013, Alcoa lost $119 million, or $0.11 a share. That’s much worse than the $2 million, or nil per share, it lost a year earlier. If you exclude plant-closure costs and other unusual items, Alcoa’s earnings per share would have risen 16.7%, to $0.07 from $0.06. On that basis, the latest earnings beat the consensus estimate of $0.06 a share....

INTERNATIONAL BUSINESS MACHINES CORP., $206.35, New York symbol IBM, is paying an undisclosed sum for SoftLayer Technologies. Based in Dallas, Texas, this privately held firm sells online data-storage space and related services to 21,000 business clients. It has 13 data centres in the U.S., Asia and Europe. IBM expects to complete this purchase by September 30, 2013. Demand for cloud computing, which mainly involves storing data on remote, secure servers, is growing strongly. That’s because it gives cost-conscious businesses access to better services and software without the high cost of buying and setting up their own servers. SoftLayer’s technology will enhance IBM’s cloud-computing expertise and help it increase its annual revenue from this field to $7 billion by 2015. To put that in context, IBM’s total revenue was $104.5 billion in 2012....

DIEBOLD INC., $29.66, New York symbol DBD, makes automated teller machines (ATMs), vaults and building-security systems. This week, the company announced a major new restructuring plan, including job cuts, selling certain plants and merging customer service activities. These moves should cut its annual costs by $100 million to $150 million by the end of 2015. The lower costs will make Diebold more profitable, particularly as the uncertain economy prompts banks to cut spending on new ATMs. In the three months ended March 31, 2013, Diebold’s revenue fell 9.3%, to $633.5 million from $698.5 million a year earlier....

IBM reported disappointing earnings for the first quarter of 2013. That’s because businesses put off signing deals for new computers and related services due to the uncertain economy.

We like IBM’s long-term outlook as much as ever. The company is in a strong position to profit from several trends, including cloud computing and data analytics....

INTERNATIONAL BUSINESS MACHINES CORP., $190.00, New York symbol IBM, reported lower-than-expected earnings and revenue for the latest quarter. That’s why the stock fell 8% on Friday. In the three months ended March 31, 2013, the company earned $3.03 billion. That’s down 1.1% from $3.07 billion a year earlier. IBM spent $2.6 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share rose 3.4%, to $2.70 from $2.61. Without unusual items, such as costs to integrate recently purchased companies, IBM’s earnings per share would have risen 7.9%, to $3.00 from $2.78. The gain was mainly the result of the company’s ongoing efforts to cut costs and improve productivity. Still, the latest earnings missed the consensus estimate of $3.05 a share....