IBM Powers Down the Dow Despite Intel's Gain

A downbeat day for investors sees Allergan once again spurning Valeant Pharmaceuticals' takeover bid.

Jun 10, 2014 at 2:30PM
Daily Fool

The market's winning streak has ground to a halt today as the Dow Jones Industrial Average (DJINDICES:^DJI) was eight points in the red as of 2:30 p.m. EDT. Half of its member stocks were taking losses on the day. IBM (NYSE:IBM) has been the Dow's biggest laggard so far, shedding 1.2%, while fellow blue-chip tech stock Intel (NASDAQ:INTC) has led the index with a gain of about 1.4%. Let's catch up on what you need to know.

Can IBM bounce back?

Ibm Logo

Source: Wikimedia Commons

IBM' downswing comes as an old competitor rears its head in challenge. Hewlett-Packard is releasing two supercomputers, dubbed Apollo, to challenge the company in the traditional hardware business. IBM has steered away somewhat from hardware as of late: The company's high-performance computing market share declined by more than 4 percentage points last year, falling below HP in that category, according to stats from IDC. IBM already sold off its low-end computing segment to Lenovo earlier this year in light of ongoing sales declines in that hardware business that have disappointed investors and weighed down recent quarters.

It's clear IBM needs to do something to keep investors confident. The company's hardware challenges have frustrated shareholders, but its struggles internationally may be even more troubling for the road ahead. China's moves to push for domestic banks to turn away from U.S. computing in the wake of allegations of NSA spying certainly aren't good for IBM, which saw its Asia-Pacific revenue fall by 12.5% in its most recent quarter. IBM has focused on a few growth niches to turn around the declines both at home and abroad, with the Internet of Things and cloud computing boding well for the long-term future -- but in the near term, IBM's struggles look likely to slog on.

Fellow Dow tech stock Intel has had its own challenges lately, but investors have pulled behind this stock today despite little news. Intel investors are still waiting on the company to establish itself as a major player in the mobile market -- particularly in smartphones, where savvy rivals have raced ahead in the push to gain market share. As fellow Fool Ashraf Eassa noted, however, Intel is on pace to capture a strong piece of the tablet pie in 2014. The company plans to ship 40 million tablet chips this year. While Intel's still playing catch up in the smartphone market, bringing significant tablet market share into the fold will be a huge step up for a company that has struggled with the decline of the PC market in recent years.

Outside the Dow today, Botox maker Allergan (NYSE:AGN) has made waves through the health-care space by yet again turning down an offer from interested buyer Valeant Pharmaceuticals (NYSE:VRX). Both stocks are on the downswing after Allergan turned away Valeant's new $53 billion offer, reiterating concerns about Valeant's business model while claiming the bid didn't properly value its own potential. Valeant has pushed hard to pick up the company, and the latest words from the would-be buyer indicate that a hostile takeover move may be coming soon -- especially considering that Allergan is refusing to even sit down and talk about a potential buyout with its suitor. Don't expect this acquisition push to lift soon.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Intel and Valeant Pharmaceuticals. The Motley Fool owns shares of Intel, International Business Machines, and Valeant Pharmaceuticals. 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.

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.

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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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