Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



IBM Leads the Dow Jones' Decline Today

IBM (NYSE: IBM  ) is leading the Dow Jones Industrial Average (DJINDICES: ^DJI  )  down as the company holds its investor day. As of 1:30 p.m. EDT the Dow was down 51 points to 16,665. The S&P 500 (SNPINDEX: ^GSPC  ) was down three points to 1,895.

IBM is holding its investor day in New York City today; investors who didn't make it can watch through the company's live webcast. CFO Martin Schroeter reiterated IBM's target for 2015 of at least $20 in earnings per share, up from this year's expectations of $15 per share. Schroeter said, "Quite frankly, we are seeing very good growth out of software, good growth out of services, but challenges in hardware."

"Challenges" is an understatement, as the company's hardware business dropped 20% in the first quarter after a 20% drop in the fourth quarter of 2013. While CEO Ginni Rometty believes the drop in the server business is cyclical, some are not so sure, as there is fallout worldwide from Edward Snowden's disclosures last year of U.S. tech companies helping the U.S. government spy abroad.

So where will the $5 increase in EPS come from? Schroeter expects an additional $3.25 through higher-margin services, and another $2 through increased share repurchases. IBM is focused on a few main areas, namely, cloud computing, data, mobile, social, and security. The most high-profile of these efforts is the company's Watson cloud computing project. IBM has been investing heavily in it since 2006 and gave its first real public demonstration through its performances on Jeopardy! in 2011.

The company has expanded the Watson project and the technology behind it into fields that require large data-processing capacity and real-time solutions, namely the financial-services sector and the health care sector. Also coming out of the project are spinoffs such as the new technology revealed this week: "elastic storage." The company claims the technology will allow for up to a 90% reduction in storage costs by allowing customers to use cheap servers together to form a data center and add servers one at a time instead of buying massive arrays for storage.

While many investors are sullen on IBM's prospects, Warren Buffett has taken the long view on the company, and his Berkshire Hathaway is now IBM's largest shareholder. With a 103-year history and a CEO with a long time horizon, IBM should continue to be an innovator and a major presence in the technology world for years to come.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now for just a fraction of the price of Apple stock. Click here to get the full story in this eye-opening new report.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2957450, ~/Articles/ArticleHandler.aspx, 8/27/2015 8:14:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Dzombak

Dan Dzombak has written for The Motley Fool since 2008. He covers value investing, investing process, and success among other things. You can follow him on Facebook or Twitter by clicking the buttons below or head over to his blog at

Today's Market

updated Moments ago Sponsored by:
DOW 16,654.77 369.26 2.27%
S&P 500 1,987.66 47.15 2.43%
NASD 4,812.71 115.17 2.45%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 4:01 PM
IBM $148.54 Up +1.84 +1.25%
International Busi… CAPS Rating: ****
^DJI $16654.77 Up +369.26 +2.27%
^GSPC $1987.66 Up +47.15 +2.43%
S&P 500 INDEX CAPS Rating: No stars