IBM's Crashing Revenue Keeps the Dow Sliding

United Technologies and Boeing make the most of the Dow's day, but IBM's fall pushes the blue-chip index into the red.

Jan 22, 2014 at 2:30PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks are sliding again today as blue-chip earnings roll on, with the Dow Jones Industrial Average (DJINDICES:^DJI) down more than 31 points as of 2:30 p.m. EST. The Dow's getting little help from tech stock IBM (NYSE:IBM), which reported earnings yesterday and has since dropped a steep 3.4%. However, the outlook's not all bad for investors today: United Technologies (NYSE:UTX) has managed to make the most of its own earnings report this morning and is in the green, trailing today's big Dow leader, Boeing (NYSE:BA). Let's catch up with what you need to know.

IBM's revenue keeps on falling
Things just haven't gone well for IBM lately. The stock was one of the Dow's worst components last year and has lost ground over the past 52 weeks despite the market's huge rally. Today won't help. IBM reported quarterly earnings yesterday after the closing bell, and while the company's earnings did grow by 6% to beat analyst expectations, revenue fell 5.5% -- the seventh consecutive quarter in which Big Blue has seen sales drop.

IBM's hardware division has lost 26% in revenue year over year. Worse, emerging markets haven't managed to catch on at IBM either, particularly in China, where the company saw revenue plunge by 23%. It's all adding up to a shaky future for the company, and while IBM's done a good job of meeting profit forecasts over the past few quarters, analysts are concerned that the trend of falling revenue could mean an earnings miss could be coming in the near future. Regardless of hits or misses, IBM certainly needs to find a growth spark soon to keep investors around.

United Technologies isn't having the same trouble with earnings-related stock drops today, as the conglomerate's shares have climbed by 0.9% so far to rank among the Dow's leaders. Net income fell by 29% in its last quarter, according to the earnings report issued this morning. On an adjusted basis, United Technologies still managed to beat Wall Street's profit projections handily.

Revenue missed expectations slightly, although a delay in meeting a helicopter contract negatively affected United Technologies in that department. The company's aerospace systems sales grew by 9%, while its Pratt & Whitney subsidiary saw sales jump 5%. Even with defense budgets under fire, aerospace is an industry on the rise and should continue to fuel growth at United Technologies in the near future.

Look no further than fellow Dow aerospace player Boeing to see how much momentum this industry can deliver. Boeing is the Dow leader on the day, with the stock up 1.8% so far. It was also the Dow's leader by a wide margin in 2013, and commercial aerospace sales and deliveries continue to soar at Boeing. China's market for airplanes has grown mightily in the recent past, and Boeing announced this week that it plans to ship 140 planes to the country in 2014. That's just below the record 143 aircraft it shipped last year. If Boeing can keep up this momentum in the world's second-largest economy, it'll carry investors on a welcome ride for a long time to come.

How you can make the most of the market's rise
Even with IBM's fall as of late, Boeing and other top stocks around the markets have returned great gains over the past year. Have you made the most of the market's rally? Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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