wall street
INTERNATIONAL BUSINESS MACHINES CORP., $125.26, New York symbol IBM, continues to expand its business-software operations. That’s because it earns higher profits from selling software and computer-management services than selling mainframe computers. This week, the company agreed to buy Sterling Commerce from AT&T (see below). Ohio-based Sterling makes software that helps automate and streamline transactions between businesses, such as buying raw materials and replenishing inventory. Sterling has over 18,000 clients. The sale will close later this year. IBM is paying $1.4 billion for Sterling. To put this figure in context, IBM earned $2.6 billion, or $1.97 a share, in the three months ended March 31, 2010....
INTERNATIONAL BUSINESS MACHINES CORP., $131.19, New York symbol IBM, aims to double its earnings to $20 a share by 2015. To achieve this goal, IBM will expand in developing markets like Russia, India, Brazil and China. These countries are attracting more business activity as their economies grow. That’s increasing the need for IBM’s mainframe computers and technical expertise. By 2015, IBM aims to get 25% of its revenue from these markets, up from 19% last year. The company will also continue to spur its growth by purchasing related companies and assets. It will probably spend $20 billion on these purchases through 2015. That’s equal to 12% of its $170.4-billion market cap....
On Thursday, May 6, 2010, the Dow Jones Industrial Average opened at around 10,860. Later that afternoon, it suddenly fell 9.2%, to 9,869.62. In the space of just a few minutes, it had recovered most of these losses, and closed at 10,520.32. It’s now back to its pre-crash level of around 10,860. The Securities and Exchange Commission (SEC) is investigating the drop, but an exact cause has not yet been found. No matter what caused the crash, some of the trades that occurred between 2:40 p.m. and 3:00 p.m. eastern time have already been cancelled. The New York and Nasdaq exchanges have cancelled all trades that occurred during that window that were more than 60% higher or lower than the stock’s price just before the plunge....
Gold is currently trading at around $1,183 U.S. an ounce. That’s up 4% from April 19, 2010, when it was trading at around $1,138 U.S. an ounce, but still short of gold’s all-time high of $1,214.80 U.S., which it reached in late 2009. Gold’s recent rise has partly been driven by investor fears about European sovereign debt — Greek debt in particular. These fears are prompting more investors to buy gold and gold investments, because they believe gold will provide them with additional security.
Further European debt problems would push gold up even further
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Demand for wireless services is rising sharply in North America. That’s partly because device makers continue to release new cellphones and wireless devices, such as Apple’s iPad and Amazon’s Kindle e-book reader. As well, more customers are switching from traditional phones (or land lines) to wireless services.
Tap into wireless growth with blue chip stocks that operate networks
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HEWLETT-PACKARD CO., $51.97, New York symbol HPQ, is buying smartphone-maker Palm Inc. (Nasdaq symbol PALM) for $1.2 billion. About $1 billion of the purchase price will be in cash; the remaining $200 million consists of Palm’s debt. Hewlett holds cash of $13.6 billion, or $5.79 a share, so it can easily afford this purchase. The deal should close by July 31, 2010. Palm sells mobile-computing and communication devices to consumers and businesses worldwide. The company has one main product line: smartphones, which it sells under the Treo, Centro, Pre and Pixi brands. The Pre and Pixi smartphones use the webOS operating system. Palm will strengthen Hewlett’s own line of wireless devices. It should also help Hewlett compete as more people access the Internet through mobile devices instead of desktop and laptop computers. As well, Palm’s software expertise will help Hewlett develop new products. For example, Hewlett is working on a touch-screen tablet computer that would compete with Apple’s iPad....
We designed our Successful Investor ratings (Highest Quality, Above Average, Average and Extra Risk) to help you quickly and easily identify the best investments for long term profits. These stocks have the asset size and investment quality to weather market downturns and changing industry conditions. You’ll find our rating next to each stock we recommend in our newsletters — including the safety-conscious stocks we recommend in Canadian Wealth Advisor, our newsletter for lower-risk investing. Here are three of the factors we consider when we assign a rating to a stock....
INTERNATIONAL BUSINESS MACHINES CORP., $129.99, New York symbol IBM, fell slightly this week, even though it reported higher-than-expected earnings and revenue. In the three months ended March 31, 2010, IBM’s earnings rose 13.3%, to $2.6 billion from $2.3 billion a year earlier. Earnings per share rose 15.9%, to $1.97 from $1.70, on fewer shares outstanding. Revenue rose 5.3%, to $22.9 billion from $21.7 billion. These figures beat the consensus estimates of $1.93 a share in earnings on revenue of $22.8 billion. The gains were mainly driven by higher revenue at IBM’s mainframe computer and software divisions. As well, the company gets two-thirds of its revenue from foreign markets, and the lower U.S. dollar enhanced the results of its overseas operations....
AMAZON.COM INC., $142.17, symbol AMZN on Nasdaq, has received approval from the Canadian government to open a distribution centre in Canada. In 2002, the government let Amazon open a Canadian web site, www.amazon.ca, but would not let the company build a warehouse because of concerns about foreign ownership of Canadian cultural industries. Right now, Canadian orders are handled in the United States, and shipped into the country through a subsidiary of Canada Post. Amazon will invest $20 million in the new warehouse. It has also promised to invest $1.5 million to promote Canadian culture and authors, and make more Canadian content available to users of its Kindle electronic-book reader....
When we’re picking stocks to recommend in our newsletters, including Wall Street Stock Forecaster, our publication that covers the U.S. markets, we like to see companies that benefit from steady revenue streams from high-quality assets, long-term contracts or other reliable sources. That’s because this type of revenue helps cut a stock’s risk. It also cuts its exposure to the ups and downs of the economic cycle.