wall street
Warren Buffett’s Berkshire Hathaway Inc. (New York symbol BRK.A) now owns 5.4% of IBM $188 (New York symbol IBM; Shares outstanding: 1.2 billion; Market cap: $225.6 billion; TSINetwork Rating: Above Average; Divd. yield: 1.6%). IBM was our #1 Stock of the Year in our Wall Street Stock Forecaster newsletter last year. Since then, the stock has risen by around 49%. This is Buffett’s first major investment in a technology company. IBM’s overall revenue and earnings growth has slowed recently, due to the weaker global economy, but its long-term outlook remains bright....
L. M. Ericsson Telephone Co. (ADR), $9.71, symbol ERIC on Nasdaq (ADRs outstanding: 3.2 billion; Market cap: $31.1 billion; www.ericsson.com), is a leading maker of systems and products for telecommunications networks. The company’s divisions include Networks (55% of revenue); Global Services (40%); and Multimedia (5%). Ericsson recently closed a money-losing joint venture with Sony to design and market mobile phones. Sony paid Ericsson $1.5 billion for its share of the partnership. However, Ericsson recently joined a consortium that included Sony, Apple, Microsoft, Research in Motion and EMC to buy over 6,000 patents that belonged to bankrupt Nortel Networks for $4.5 billion. These patents cover technology in a number of areas, including Internet, wireless networking, voice applications and computer chips....
U.S. Thanksgiving Day features the famous Macy’s parade in New York. It also marks the beginning of the Christmas season, the most important sales period for the big department stores. We assess how Macy’s investment in a major merchandising plan may affect its stock market investment prospects for the holiday season and beyond. MACY’S INC. (New York symbol M; www.macysinc.com) operates 810 Macy’s and 41 Bloomingdale’s department stores in 45 states....
AT&T INC., $27.41, New York symbol T, is facing strong opposition from regulators over its planned purchase of rival wireless carrier T-Mobile from Germany’s Deutsche Telekom AG. Adding T-Mobile would make AT&T the largest wireless carrier in the U.S., with 132 million subscribers. The Federal Communications Commission feels the combination of AT&T and T-Mobile would hurt competition in the wireless market. As well, the Department of Justice has launched a court challenge to block the deal. The trial should begin in February 2012. Due to the growing uncertainty over this deal, AT&T said that it will record a $4-billion charge against its earnings for the fourth quarter of 2011. That represents the break-up fee ($3 billion in cash plus $1 billion in wireless spectrum) that AT&T agreed to pay Deutsche Telekom if it can’t complete the purchase....
This week, there was a question about the world’s largest maker of generic drugs. While an aging population is good for drug stocks, there are still a number of thorny issues to consider
We are pleased to learn that Warren Buffett has made a major investment in IBM. You may recall that IBM was our #1 Stock of the Year in Wall Street Stock Forecaster last year. Since then, the stock has risen by around 41%. I think IBM is going a lot higher in years to come, and it appears Warren feels the same way. As you know from reading our analyses, IBM has moved away from its earlier stress on manufacturing and toward a business model that combines equipment, software and service. This gives the company steadier revenues and safer growth, because its customers don’t like to change service providers when they update their equipment. In addition, IBM has a couple of key advantages in the fast-growing area of cloud computing (the general term for shifting software and data storage off of users’ machines and onto service providers’ machines, via the Internet). First, IBM has some of the best cloud-computing technology available; second, it has one of the most trusted business names on the planet. When you commit your data “to the cloud”, you won’t trust just anybody with it....
Stanley Black & Decker, $62.13, symbol SWK on New York (Shares outstanding: 168.9 million; Market cap: $10.5 billion; www.stanleyblackanddecker.com), is a recommendation of our Wall Street Stock Forecaster newsletter. Stanley Black & Decker is one of the world’s largest makers of hand and power tools for consumers. The company mainly sells its tools through home-improvement retailers like Home Depot. Its top-selling brands include Stanley, Black & Decker, FatMax and Powerlock. The company’s building-security division makes locks, automatic doors and gates. It also monitors properties for its clients, typically by closed-circuit audio and TV systems. In addition, Stanley sells specialized tools to industrial users, such as auto mechanics and construction firms....
On Friday, in response to a question from a member of my Inner Circle, I talked about Cisco Systems and the challenges technology stocks face in a highly competitive industry. (View the article: Technology stocks: Cisco Systems strives to maintain its leadership in cutting-edge technology.) Today I’d like to follow up by discussing the risks and rewards investors can expect with tech stocks in general. Fast-changing technology offers huge opportunities in these stocks. However, fast change can also bring danger....
INTERNATIONAL BUSINESS MACHINES CORP., $185.24, New York symbol IBM, rose initially in response to news that Warren Buffett’s Berkshire Hathaway Inc. (New York symbol BRK.A) now owns 5.4% of IBM. However, the stock fell 1% for the week. This is Mr. Buffett’s first major investment in a technology company. IBM’s revenue and earnings growth has slowed recently, due to the weaker global economy, but its long-term outlook remains strong. The company continues to benefit from strong growth in emerging markets, like Russia and Brazil. Strong business growth in these countries is spurring demand for reliable computer services. By 2015, IBM feels these markets will supply 30% of its revenue, up from 23% now....
Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. An intriguing question this week concerned one of the world’s best-known technology stocks. Cisco Systems offers leading-edge products in a highly competitive industry. Pat examined just how it plans to maintain its position in the face of rapid change and overseas competition....
