|Bid||142.97 x 800|
|Ask||142.98 x 1200|
|Day's Range||142.12 - 143.49|
|52 Week Range||105.94 - 154.36|
|Beta (3Y Monthly)||1.55|
|PE Ratio (TTM)||15.06|
|Earnings Date||Jul 17, 2019|
|Forward Dividend & Yield||6.48 (4.59%)|
|1y Target Est||147.21|
Shares of IBM (IBM) have easily outpaced the market in 2019 and the firm officially announced the completion of its $34 billion deal to buy Red Hat last week. With this in mind, let's see what investors should expect from the tech firm's Q2 2019 financial results...
With most blue-chip companies' earnings scheduled over the coming weeks and investors' sentiment being mixed, investors should closely monitor the movement of the Dow ETF.
International Business Machines Corp. has hailed its acquisition of Red Hat as a “game-changer,” but now it’s time for the tech giant to prove itself.
Oracle (ORCL) fails to win the lawsuit challenging JEDI contract's policies and qualifying criteria. Oracle's opposition to JEDI is likely to weigh on its ongoing business with DoD.
Second-quarter earnings are usually pretty sleepy, with forecasts for the back-to-school and holiday periods tucked away for later review amid summer vacation schedules. You may want to pay attention this year, though.
Benzinga has examined prospects for many investor favorite stocks over the past week. Bullish calls included big banks and a retailer bucking the industry trend. Bearish calls included pharma and video ...
(Bloomberg) -- Oracle Corp. lost its legal challenge to the Pentagon’s $10 billion cloud contract on Friday, clearing the way for the government to award the contract to Amazon.com Inc. or Microsoft Corp.Federal Claims Court Senior Judge Eric Bruggink dismissed the company’s argument that the contract violates federal procurement laws and is unfairly tainted by conflicts of interests. Bruggink said that because Oracle didn’t meet the criteria for the bid, it “cannot demonstrate prejudice as a result of other possible errors in the procurement process.”The decision is a major blow to Oracle, which risks losing a share of its federal defense business if the Pentagon awards the contract to another cloud company. The ruling eliminates a headache for the Pentagon, which has been fending off challenges to its winner-take-all strategy in the cloud contract for more than a year.“Oracle will likely be most threatened by this” decision, said Bloomberg Intelligence Analyst James Bach. “They stand to lose the most ground in the Defense market if the DOD decides JEDI is the end-all be-all.”Oracle looks forward to “working with the Department of Defense, the Intelligence Community, and other public sector agencies to deploy modern, secure hyperscale cloud solutions that meet their needs,” company spokeswoman Deborah Hellinger said in a statement. She didn’t comment on whether the company plans to appeal the decision.Elissa Smith, a Defense Department spokeswoman, said in a statement that the ruling “reaffirms the DOD’s position: the JEDI Cloud procurement process has been conducted as a fair, full and open competition, which the contracting officer and her team executed in compliance with the law.”Amazon Web Services, which was also a defendant in the case, said in a statement that the company “stands ready to support and serve what’s most important – the DoD’s mission of protecting the security of our country.”JEDI ProjectThe project, known as Joint Enterprise Defense Infrastructure cloud -- or JEDI, an acronym intended to evoke “Star Wars” imagery -- is intended to be the Defense Department’s general-purpose cloud for most of its systems and applications.The Pentagon is investing in commercial cloud services, in which computing power and storage are hosted in remote data centers, to consolidate its existing technology products, embrace artificial intelligence and machine learning, and enhance its technical capabilities on the battlefield.Vying for the contract became contentious as legacy tech companies such as Oracle and International Business Machines Corp. waged a fierce lobbying and legal campaign against the Pentagon’s decision to choose just one provider. Although they are long-time government contractors, those companies were late entrants to the cloud computing market and eyed market leader Amazon as a threat to their traditional revenue streams from the Defense Department.In April, the Pentagon eliminated Oracle and IBM from the competition, leaving Amazon and Microsoft as the final contenders. Dana Deasy, the Pentagon’s chief information officer, has said the Defense Department expects to make an award in August.Amazon Web Services was widely seen as the front-runner for the contest because it had already won a $600 million contract from the Central Intelligence Agency that helped it obtain much-needed security approvals. Microsoft is catching up to Amazon through its advancements in winning such clearances, as well as a recent cloud deal with the intelligence community and years of experience working with the Defense Department.Partial VindicationThe ruling is a partial vindication for Pentagon officials who have battled months of allegations that its procurement process was corrupt, including the circulation of a 33-page anti-Amazon dossier around Washington that suggested improper personal relationships had given Amazon an edge. The Defense Department has also faced pressure from lawmakers, who criticized the deal for lacking enough competition from industry.There are still potential hurdles for the Defense Department as it moves forward with the bid. Either Microsoft or Amazon could lodge a challenge of the contract with Government Accountability Office or in the Federal Claims Court if they were to lose. Oracle could also appeal the ruling in the Court of Appeals for the Federal Circuit.On Friday, Chris Lynch, the former director of the Defense Digital Service, which designed the project, praised his former team for their work on the project.“JEDI will immediately deliver much needed capabilities to the warfighter, deliver incredible capabilities that are built from the best tech, and it will change lives,” he tweeted. “Couldn’t be more proud.”Contested TermsOracle’s lawsuit, which was filed in December, alleged that the Pentagon’s minimum requirements for the contract as well as its decision to pick just one winner violated federal procurement laws designed to ensure competition. The government has said choosing one winner would reduce security risks and better enable it to consolidate its technology products.The suit also claimed that the procurement has been marred by conflicts of interest, including ties between former Defense Department officials and Amazon. At least two of the former employees were offered jobs at the company while working on the contract, according to the lawsuit.The Pentagon determined in its internal review that the relationships had no adverse impact on the integrity of the acquisition process but said the department’s inspector general was looking into potential unethical conduct. Bruggink said in his ruling that the Defense Department’s determination on the allegations was not “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”(Updates with Pentagon comment in sixth paragraph.)\--With assistance from Nico Grant.To contact the reporter on this story: Naomi Nix in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Sara Forden at email@example.com, Larry LiebertFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
International Business Machines (NYSE:IBM) reports its second-quarter earnings on July 17 after the bell. This will be the company's first earnings report since completing the purchase of Red Hat. For this reason, many investors may look for clues as to whether this acquisition can help resume growth and reverse the revenue declines that have led to an overall decrease in IBM stock over the last few years.Source: Shutterstock Although earnings reports tend to tell what happened in the past, investors need to go into this report focused on the future. Watch Revenues, GuidanceConsensus IBM earnings estimates for the quarter stand at $3.07 per share. If this number holds, it will come in one penny per share less than the second quarter of 2018, when the company earned $3.08 per share. They also forecast revenues of $19.16 billion, 4.2% less than the $20 billion earned in the same quarter last year.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAlthough the Armonk, New York-based IT giant usually beats earnings estimates, the company fell short on revenue in the first quarter. Revenue growth has become an ongoing challenge as none of its divisions registered revenue growth in the previous report. Hence, analysts will probably watch this report carefully on revenue guidance.With revenue disappointing, earnings growth also becomes a struggle. IBM may avoid a drop in profits. However, analysts only forecast an earnings increase of 0.7% for the year. * 10 Stocks Driving the Market to All-Time Highs (And Why) IBM's Position in the Market Remains UncertainThis makes the forward price-to-earnings (P/E) ratio of around ten much less appealing. Also, its annual dividend yields almost 4.6% and has increased for 19 consecutive years. However, with the payout ratio now at over 66%, one has to wonder how long the dividend increases can continue for IBM stock if its negligible profit growth does not improve.Also, the company recently completed its acquisition of Red Hat. However, only time will tell whether that will help make the venerable IT giant successful in today's tech world. IBM has existed since 1911. It also managed to remain relevant long after its original technology became obsolete.However, the likes of Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Microsoft (NASDAQ:MSFT) have now passed the company by to a significant degree. With this challenge, one has to wonder whether IBM can successfully reinvent itself again. IBM Stock Is 'Speculative'This makes IBM stock something you would not normally associate with a large, profitable company -- speculative. It is a different kind of speculative than a penny stock hoping to make it back. In this case, IBM bulls hope the company can do well enough to maintain itself and its annual dividend increases.If Red Hat integration and other initiatives can resume significant growth rates for the company, IBM stock is very cheap at these levels. However, if anemic growth forces the company to end its 19-year streak of dividend increases, stockholders will probably face years of pain. The Bottom Line on IBMGoing into earnings, IBM stock investors need to watch guidance. Given its history, I think IBM will beat earnings. However, revenue declines and a high dividend payout ratio should cause concern.Hopefully for IBM stock bulls, revenue guidance will offer some hope, both for the integration of Red Hat into the company and for the resumption of revenue growth.To be sure, the low price-to-earnings ratio and the high dividend yield in a company with a history of payout increases could attract bargain hunters. However, these supposed benefits hide serious dangers. If the company fails to reverse revenue declines, a cut in payouts remains a real possibility.Hence, I think investors should avoid this stock going into earnings. Moreover, unless and until revenue looks poised to improve, I would treat IBM as speculative.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post IBM Stock Looks More Dangerous Than It Appears Ahead of Earnings appeared first on InvestorPlace.
The index endured a turbulent week but gained after the Fed Chair indicated that a rate was likely later this month.
(Bloomberg) -- Tropical Storm Barry is barreling toward Louisiana and could hit the coastline as a hurricane by Saturday, causing close to $1 billion in damage and worsening flooding in New Orleans.The system, which was about 90 miles (145 kilometers) south of the Mississippi River’s mouth as of 8 p.m. New York time, has already curbed about half the energy output in the Gulf of Mexico and helped lift oil prices to a seven-week high. It’s also prompted Louisiana Governor John Bel Edwards to declare a state of emergency, while hurricane and tropical storm warnings and watches are in place along the state’s coastline.“It is a heck of a water event once again,” Bob Henson, a meteorologist with Weather Underground, an IBM company, said by phone. “We keep hammering that water is a big threat and here we are again. Barry may or may not become a hurricane, but it will be a rain event and there could be surge problems.”The storm -- with current top winds of 45 miles an hour -- may drop as much as 25 inches of rain in some places, according to an advisory from the U.S. National Hurricane Center. Ship traffic was disrupted in the Mississippi River, where water levels are rising. Companies have cut 53% of oil and 45% of natural gas output in the Gulf.While New Orleans -- where an emergency was declared Wednesday -- won’t have a mandatory evacuation, residents should be prepared to shelter in place because the slow moving storm could bring heavy rain for 48 hours, Mayor LaToya Cantrell said at a press conference. The Mississippi is now forecast to crest at 19 feet, according to the National Weather Service. That should keep the river below the tops of levees in the city, according to Cantrell.Louisiana is already under pressure from floods after the months of rain that have set records across the U.S. and prevented U.S. farm fields from being planted. The Mississippi River in the state has been at flood stage since January and, for the first time since Bonnet Carre spillway was completed in 1937, the Army Corps of Engineers has had to open it twice in the same year to help prevent flooding in New Orleans and take pressure off levees.For a map showing assets in the storm’s path, click hereU.S. benchmark West Texas Intermediate crude traded above $60 a barrel on Friday, while natural gas futures reached the highest level in almost six weeks on Wednesday.Gulf of Mexico operators have shut-in 1.01 million barrels a day of oil production because of the storm, the Bureau of Safety and Environmental Enforcement said in a notice. Almost 1.24 billion cubic feet a day of natural gas production is also closed.The Gulf offshore region accounts for 16% of U.S. crude oil output and less than 3% of dry natural gas, according to the Energy Information Administration. More than 45% of U.S. refining capacity and 51% of gas processing is along the Gulf coast.While the offshore platforms could return to normal operations in a few days, there is a chance widespread flooding could close some refineries and make it difficult for ships to make deliveries across the region, Jim Rouiller, chief meteorologist at the Energy Weather Group near Philadelphia, said by telephone.“The first impact is to the rigs and platforms, then the second risk shows up on Friday and Saturday to the refinery areas,” Rouiller said. “The thing that is going to be really worrisome is the amount of flooding rains across Louisiana. I think the worst is yet to come.”Based on its current track, the storm will likely cause about $800 million to $900 million in damage, said Chuck Watson, a disaster modeler with Enki Research in Savannah, Georgia. That could balloon to $3.2 billion if floods overwhelm New Orleans, he said.A spokesman for the Army Corps of Engineers doesn’t believe levees will be topped by flood waters. The barriers on the lower Mississippi have been inspected daily since November when flooding became an issue.Shipping is grinding to a halt along the southern reaches of the Mississippi River as deteriorating weather conditions made it unsafe for river pilots to board and steer cargo ships. The heavy rains could hurt cotton crops in southern portions of the Mississippi Delta, said Don Keeney, a meteorologist with Maxar in Gaithersburg, Maryland. Kyle McCann, assistant to the president of the Louisiana Farm Bureau, said there hasn’t been any damage to crops in the state yet, but expects a substantial impact in coming days.Thunderstorms have already flooded New Orleans streets and the National Weather Service has issued a flash flood watch from southern Louisiana to the Florida panhandle. City pumps had trouble keeping up with the water, which is a “bad sign,” said Enki Research’s Watson.(Updates with new details throughout.)\--With assistance from Shruti Date Singh, Mike Jeffers, David Marino, Jeffrey Bair, Denitsa Tsekova and Sharon Cho.To contact the reporter on this story: Brian K. Sullivan in Boston at firstname.lastname@example.orgTo contact the editors responsible for this story: Tina Davis at email@example.com, Pratish NarayananFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- In a packed ballroom in Beijing’s national convention center, the executive from a major technology company laid out ambitious plans for the future of artificial intelligence in China. He explained how customized semiconductors would help power everything from autonomous cars to voice-activated industrial machines.Only this wasn’t a state-backed enterprise. This was Intel Corp., the largest U.S. chipmaker.The company’s AI chief, Naveen Rao, pledged to work closely, “engineer to engineer," on cutting-edge technology with the 7,000 people that attended Baidu Inc.’s annual developers conference last week. Intel was the top sponsor of the event.Rao made no mention of politics, though his overwhelming support of Baidu, a Chinese national tech champion, sent a powerful message: Even as U.S. and Chinese leaders are locked in a fierce battle over technological supremacy, companies like Intel remain big backers of China’s tech industry because they rely on the country for significant contributions of revenue, production chains and even talent.Intel made 27% of its revenue in China last year, more than in the U.S. or any other market, but it’s fighting to hold on to customers there that it spent decades cultivating. Like many American multinationals with large businesses in the country, Intel is walking a fine line between holding on to that lucrative market and keeping in Washington’s good graces. Neutrality is becoming a tougher stance to maintain."There’s been a psychotic break” in what some leaders in the U.S. government want and what American businesses want, said Josh Dorfman, founder of One Thousand Million, a China-focused consultancy and think tank based in Dallas. "Unlike in China, U.S. companies aren’t beholden to the country and are not obligated in any way, shape, or form to be patriotic. They want to make money."An Intel spokesman said the company remains engaged with Chinese customers that aren’t on the U.S.’s list of those it sees as a security threat. China is a substantial market for Intel and it has no intention of pulling out now.Intel isn’t alone. Apple Inc. is heavily dependent on China not only for the manufacture of Mac computers and iPhones but it’s also a major consumer market, accounting for about 20% of sales. Even as U.S. President Donald Trump threatened tariffs that would hit Apple products, the California-based company was making plans to shift production of its new Mac Pro computer to China, sending a clear signal of support.While some companies are considering moving part of their production out of the country, many others are making gestures of goodwill. Walmart Inc. last week pledged to invest $1.2 billion in China to upgrade logistics distribution centers. Boeing Co. is in negotiations to sell 100 jetliners to Chinese airlines in one of its largest-ever deals, Bloomberg News reported. And last month, 600 U.S. companies and trade groups signed a letter to Trump warning of tariff-related hits to their businesses.IBM’s Greater China group chairman Liming Chen said that the escalation of China-U.S. trade frictions has created a "confusing environment" for businesses. He outlined International Business Machine Corp.’s long relationship with China, dating back to its products first entering the country in the 1920s, and formally establishing a Shanghai office in 1936."IBM has participated in the rapid development of China over the past 40 years, while China has also nourished IBM," he wrote in a post on WeChat in June, calling the country an "indispensable part of our global strategy map."The U.S.-China trade war is anchored in competition to dominate the next generation of wireless networks and other technologies as much as politics. The Trump administration worries that American companies in search of profits could actually help China’s tech industry eclipse U.S. prowess in sensitive areas like artificial intelligence and machine learning.The chairman of the U.S. Joint Chiefs of Staff, Joseph Dunford, lambasted Alphabet Inc. in March for Google’s AI work in China, which he alleged "indirectly benefits the Chinese military." Trump repeated the critique in a subsequent tweet, questioning the Google parent’s loyalties. Google has said it doesn’t work with China’s military.The same nationalistic fervor is partly behind the Commerce Department’s May prohibition on selling American components to Chinese telecom behemoth Huawei Technologies Co. Despite Trump’s recent pledge to ease restrictions, Huawei remains on America’s so-called entities list and U.S. firms must apply for special licenses to sell parts to the company.That hasn’t stopped chipmaker Micron Technology Inc. from feverishly trying to find ways to keep supplying the company, one of its largest customers. The U.S. semiconductor industry also lobbied the Trump administration to loosen restrictions on Huawei.Still, American tech companies are facing a new global reality. They may no longer be able to overlook geopolitics in favor of profits. China may not be the growth savior it once was.Tech companies "must now live in a world where their Chinese business partners and global value chains at any given day could blow up," said James Lewis, director of the tech and public policy program at the Center for Strategic and International Studies, a Washington think-tank. “Trump might have backed off Huawei for now but next week it could be something different and any of these companies are fair game.”Lewis, who previously served as the U.S. Commerce Department’s lead for national security and espionage concerns related to high-technology trade with China, said Chinese firms are also racing to become less reliant on the very American firms bending over backwards to keep their business.Splitting the two economies won’t be easy. Research, development, manufacturing and talent in the U.S. and China are still very much interconnected."Innovation by American companies is fueled by access to the Chinese market," said Samm Sacks, cybersecurity policy and China digital economy fellow at think tank New America, in Congressional testimony in May.For Intel’s AI chief, collaboration with China helps the company to build better products and bring new technology to market fast.“I’m proud of the strong and growing partnership between Intel and Baidu,” Intel’s Rao said in Beijing, after greeting developers with a hearty “nihao.” “By working together to advance AI, Baidu and Intel are helping to usher in a world where AI is ubiquitous.”\--With assistance from Gao Yuan.To contact the reporters on this story: Shelly Banjo in Hong Kong at firstname.lastname@example.org;Zheping Huang in Hong Kong at email@example.com;Ian King in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
International Business Machines (NYSE:IBM), once called Big Blue, has closed on its $34 billion purchase of Red Hat, but the crowds aren't cheering.Source: Shutterstock Since the deal was announced in October IBM shares have risen 17%, opening for trade July 11 at about $141, a market cap of $125 billion.But the average stock in the S&P 500 average is up nearly 13% in that time, and the gain doesn't come close to equaling the purchase price.InvestorPlace - Stock Market News, Stock Advice & Trading TipsInvestors are skeptical that this deal will vault IBM into the higher reaches of the technology universe. A year ago, Facebook (NASDAQ:FB) lost $124 billion in market cap in a single day. Oracle (NASDAQ:ORCL), long considered a cloud also-ran, is worth $200 billion.In today's technology universe, in other words, IBM is a welterweight. No Magic Bullet for IBM StockIt's clear that the Red Hat deal is no magic bullet for all that ails IBM.Red Hat was a fast-growing software company whose Linux operating system, JBoss middleware and, most especially, OpenShift container system were becoming key ingredients for companies transforming their computing systems into clouds. IBM was a lumbering, no-growth maker of mainframes, an outsourcer of software development. * 10 Stocks to Sell for an Economic Slowdown Together they're supposed to be the place to go for "hybrid cloud," a world where corporate data centers run the same technologies as Amazon (NASDAQ:AMZN) AWS or Microsoft (NASDAQ:MSFT) Azure, where companies move data freely among their own clouds and the public clouds.The problem is that most companies have already set their hybrid cloud strategies, that Red Hat's enabling technology is a small part of the whole, and that IBM itself is still a bureaucratic labyrinth where good ideas go to die.The hope was that Red Hat would combine its speed with IBM's heft. The fear is that Red Hatters, as they're called, will take the $190/share they're getting and run away. Hobble the CompetitionIf IBM can't catch up with the Cloud Czars, the company figures, it can at least hobble them.The company's first post-Red Hat white paper is a proposal to regulate what IBM lawyers call "media companies," amending the Communications Decency Act to make Facebook, Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) Google and any other free web services responsible for what people post to them. IBM itself was under anti-trust consent decrees for decades. Its lawyers know how government can stop innovation in its tracks.The idea, in the words of IBM CEO Ginni Rometty, is to distinguish between "business data" and "consumer data," regulating the latter and letting the former mostly slide. IBM is entirely a business data company.Politicians on both the left and right are gleefully jumping on the proposal. Even Microsoft co-founder Bill Gates approves of action. Something is likely to happen, something big and destructive to the value of the internet companies that long ago passed IBM by.But will that help IBM? Not likely. The Bottom Line for International Business MachinesIBM has spent this year clearing the decks for Red Hat, selling off some software lines and even spinning off part of the Watson AI program (its former savior) to Centerbridge Partners, a private equity firm.The new company is supposed to go toe-to-toe with Salesforce (NASDAQ:CRM), Oracle and Adobe (NASDAQ:ADBE). But the spinoff illustrates why investors are right to be skeptical of IBM itself going forward.IBM is a dividend stock, currently paying $1.62 per quarter, yielding 4.6%. GAAP earnings for the last year were $9.51 per share. Keeping the earnings above the dividend, protecting the payout, is all people care about when they buy IBM stock today.Watch to see if that changes.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN and MSFT. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post IBM Stock's Purchase of Red Hat Opens to Skeptical Reviews appeared first on InvestorPlace.
Palo Alto-based cloud data provider Cloudera Inc. plans to open-source all of its software and focus on providing value-added services on top of its platform, the company said Wednesday.
International Business Machines Corp. (IBM) is showing some conflicting signals right now, as the company expects an earnings hit in its July 17 report, within an otherwise solid outlook. Paradoxically, the hit will likely come from IBM’s biggest piece of good news: the recent close of its Red Hat, Inc. (RHT) acquisition.First, some background. Last year, IBM bid $34 billion to acquire Red Hat, the open source cloud company. The deal has been completed as of this week, with IBM paying $190 per share for Red Hat’s existing stock. The deal was closed in cash, and IBM issued a bond series to cover $20 billion of the purchase price. The added debt pushes Big Blue’s total borrowed liabilities over $60 billion, and the company will be suspending share buybacks for the next two years.On the plus side, bringing Red Hat on board offers real advantages to IBM. It makes Big Blue the world’s largest hybrid cloud provider, adding services to a business that already brings in $19 billion annually for IBM. Red Hat will function as a distinct division within the larger company, staying focused on its current core business of open source software. IBM’s CEO, Ginni Rometty, says that with this acquisition, “IBM will offer companies the only open cloud solution that will unlock the full value of the cloud for their business.”Putting on a New HatAs for Red Hat (RHT), company CEO Jim Whitehurst said of the deal, “Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience – all while preserving our unique culture and unwavering commitment to open source innovation.”Specifically, the Red Hat brings to IBM the ability to tap into the large customer base of companies that are not yet all-in on cloud computing. According to IBM’s research, some 80% of the potential market is reluctant to fully enter cloud computing, mainly due to the proprietary nature of the systems. Red Hat’s open source software offers a viable alternative.More importantly, as far as IBM is concerned, Red Hat generates nearly $1 billion in free cash flow annually. This is of major importance, as is Red Hat’s $3.4 billion in fiscal 2019 revenues, considering the debt load that IBM took on to complete the acquisition.Short Term Pain, Long Term GainIt’s a bright vision of the future, and it may well come true. Accounting rules, however, will require in the short term that IBM report the acquisition costs against the bottom line.According to Evercore analyst Amit Daryanani, the negative impact could be as much as 80 cents per share for 2019 and 1 dollar per share in 2020. This puts Daryanani’s EPS estimate for FY2019 at $13.10 to $13.90, with the upper end in line with company guidance.Daryanani explains, “Although Red Hat's revenue profile is fairly substantial, with strong levels of profitability, we note that purchase accounting treatment of the target company's deferred revenue will make IBM unable recognize a meaningful portion of Red Hat's deferred revenue as it converts to actual revenue; this is while IBM will have to incur 100% of Red Hat's operating expense.”Despite predicting an earnings hit on the way, Daryanani still sees IBM as a long-term gain for investors. He gives the stock an outperform rating and a price target of $150, basing his positive outlook on the combination of IBM’s 23% ytd gains and Red Hat’s solidly profitable bottom line. His price target suggests an upside of 6.7% for IBM shares. IBM reports earnings on July 17, and we’ll see then how this forecast matches up with reality.Stifel’s David Grossman believes it will. He sees IBM in a more traditional light, describing the stock as “a defensive holding with two potential catalysts, namely continued improvement in its core infrastructure services business and demonstrated success in leveraging Red Hat.” His price target, $169, clearly shows his confidence in IBM’s prospects – it implies an impressive 20% upside for the stock.Overall, IBM holds a moderate buy rating from the analyst consensus. The average price target of $157 gives an upside of 12% when compared to the $140 current trading price.View IBM Price Target & Analyst Ratings Detail
Microsoft (MSFT) shares have jumped over 35% in 2019. Now let's see if investors should consider buying MSFT stock at its new highs, with Microsoft set to report its Q4 fiscal 2019 financial results on July 18.
In a blog post on Wednesday, IBM called for a fresh look at Section 230 of the Communications Decency Act (CDA 230), which exempts developers of online services from lawsuits stemming from user-posted content such as restaurant reviews or social media photos. "We simply believe companies should also be held legally responsible to use reasonable, common-sense care when it comes to moderating online content," Ryan Hagemann, an IBM government and regulatory affairs technology policy executive said in the blog post. Silicon Valley has long opposed efforts to rewrite the decades-old Communications Decency Act, which has been credited with helping the rapid growth of internet companies over the past 20 years.
Slews of Form 4s – the regulatory paperwork required for insider stock transactions – dropped late Tuesday, as top brass Red Hatters finally got their first big dollar payouts from the $34 billion IBM deal.
T-Mobile news for Wednesday about the wireless company joining the S&P 500 has TMUS stock up.Source: Mike Mozart via Flickr (modified)T-Mobile (NASDAQ:TMUS) is joining the S&P 500 thanks to a couple of different changes. The first change is that the index has relaxed some of its rules, which allows TMUS to join it.The rule change is that companies no longer have to have 50% of their shares in the hands of public investors. That is good t-Mobile news as only has 37% of its outstanding shares belonging to public investors, reports Barron's.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe other reason that T-Mobile is able to join the S&P 500 is that a new spot has opened up on the index. This spot was previously held by Red Hat. However, that company is no longer on the public market after being acquired by IBM (NYSE:IBM).The T-Mobile news about is joining the S&P 500 is actually a little ahead of its debut on the index. TMUS won't be officially replacing Red Hat on the index until next week, Yahoo Finance notes. * 7 Retail Stocks to Buy for the Second Half of 2019 While T-Mobile is joining the S&P 500, there's no guarantee it will be a part of the index for long. This is due to the company currently attempting a merger with rival wireless company Sprint (NYSE:S).Following the T-Mobile news about the company joining the S&P 500, TMUS stock was up 4% as of Wednesday afternoon. The stock is also up 15% since the start of the year. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks As of this writing, William White did not hold a position in any of the aforementioned securities.The post T-Mobile News: TMUS Stock Joins S&P 500 Index appeared first on InvestorPlace.