Verizon and IBM Report Less Than Stellar Earnings

Good morning, good lookin'. Here are the two things you need to know on Jan. 22.

Jan 22, 2014 at 6:00AM
Forgot to wear your Beans Boots to work yesterday? You're one cold-footed unhappy camper. (Tom Brady should have plenty of time now to sell you some Uggs.) The Dow Jones Industrial Average (DJINDICES:^DJI) dropped 44 points Wednesday after poor earnings from big boys Johnson & Johnson, Verizon (NYSE:VZ), and IBM (NYSE:IBM). But traders were just looking to beat the snow.

1. IBM gets burned by poor server sales
It was all about IBM after big news that it's selling the servers business to China's Lenovo Group and a fourth-quarter earnings report. That's a lot of financial gigabytes for Wall Street to chew. After the Lenovo news, IBM stock fell 1%. After the earnings report, it's down another 2.6% in after-hours trading. What's happening to "Big Blue"? 

First IBM quit calculators, and then it sold its "ThinkPad" PC business to China's surging tech power Lenovo in 2005. Now Lenovo's back for more Blue. According to reports, Lenovo is bullish on the computer hardware market and is in talks to buy IBM's server business.  

The fourth quarter was the biggest revenue drop in four years, and it's all hardware's fault. IBM's sales of computer hardware to clients continues to plummet (why does Lenovo keep buying IBM's worst performing businesses?), down 27%.

Profits actually gained despite the fall in sales. But Wall Street is noticing that consumers are abandoning IBM hardware. We're all floating up into cloud data (especially in the Bay Area), and we're not even buying software; we're renting it. IBM is being outraced by technology, and it's focusing on software and services to try to catch up.

2. Verizon reports higher earnings
Can you hear me now, Verizon? The big red wireless giant Verizon released earnings Tuesday that topped analysts' expectations with wider profit margins (even though they can't even load your ESPN updates in a timely manner). The average consumer is paying 7% more than last year, and that's not bad.

So why did the stock fall more than 1%? Competition, baby. In TV land, Verizon's Fiber Optics option is seeing slowing sales to big cable deals. And in phone world, AT&T, Sprint, and T-Mobile are out to beat Goliath as well.

What's new at Verizon? It gave some details that its $135 billion deal to buy the remaining 45% of Vodafone's wireless unit closes in February. It also is paying $200 million to Intel for a TV box that would let anyone with an Internet connection watch live TV. The problem? A bunch of other companies have tried this ... with nada success.
  • Fourth-quarter earnings from Coach and eBay
As originally published on 
There's a huge difference between a good stock ...
... and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributors Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Coach, eBay, Intel, Johnson & Johnson, and Vodafone and owns shares of Coach, eBay, Intel, IBM, and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information