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From: http://www.dailyfinance.com/on/seaworld-IPO-stock-market-news/

Market Minute: SeaWorld Goes Public, Valued at $2.5 Billion

April 19, 2013 Bartle Doo Leave a comment

By DailyFinance Staff

Filed under: Earnings, Market News

Jason Collier, AP

One of the biggest IPOs this year could make a big splash today. Theme park operator SeaWorld was priced at the high end of expectations, $27 a share. That values the company at $2.5 dollars.

Two out of three ain’t bad: That’s the scorecard from the three tech giants that reported quarterly results late yesterday.
Microsoft’s (MSFT) profit rose by a better-than-expected 19 percent to more than $6. Sales of server software and Xbox video games were strong, but newly booked revenue from Windows was essentially flat.

Google’s (GOOG) net rose 16 percent, also topping expectations. Revenue growth in its core advertising business was also strong.

But IBM (IBM) came up short of Street expectations and revenue was hurt by sluggish demand from corporate tech customers. It the first time IBM has missed the target since 2005. Separately, Big Blue is in talks to sell its huge server business to China-based Lenovo.

General Electric’s (GE) net rose 16 percent, in line with expectations. Revenue was flat, but a bit stronger than expected. GE is often considered a bellwether for the broader economy.

Blackstone Group (BX) has withdrawn its offer for Dell (DELL) after discovering the computer maker’s business is deteriorating faster than previously thought. That leaves only investor Carl Icahn as a possible rival to the bid from a group led by company founder Michael Dell to take the company private.

It was seven months ago today that Apple (AAPL) shares hit their all-time high of $702; they closed yesterday at $392. That’s a drop of 44 percent.

And Netflix (NFLX) is hoping to build on the success of its “House of Card” series with a second original program. Today it begins streaming the entire first season of a gothic horror series, “Hemlock Grove.”

-Produced by Drew Trachtenberg

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By Anders Bylund, The Motley Fool

Blame Microsoft for Tech Stocks Dragging on the Dow Today

April 11, 2013 Bartle Doo Leave a comment

Filed under: Investing

The Dow Jones Industrial Average is having a fine day today, rising 76 points as of 1:45 p.m. EDT on a cheerful unemployment report. But this rosy performance was achieved despite a terrible fall for three of the Dow’s four tech components.

Tech stocks scored an unfortunate hat trick by claiming the three worst performances on today’s Dow. Hewlett-Packard has dropped 7%, Microsoft has lost 5% of its value, and Intel has taken a 2.7% haircut. No other Dow stock has plunged anywhere near as much. IBM was spared from this bloodbath, instead rising 0.3%.

Yes, there’s a pattern here. The largest publicly traded builder of PC systems took the hardest hit, followed by the king of PC operating systems, and then the undisputed champ PC processors. The catalyst was a pair of catastrophic market reports on PC sales from sector analyst firms IDC and Gartner. Big Blue doesn’t sell small systems anymore, which explains the lack of market backlash against that particular technology titan.

IDC‘s report said PC system shipments plunged 14% year over year in the first quarter, nearly twice as fast as the firm had expected. It’s the fourth consecutive annualized unit drop, and PC sales haven’t been this weak since 2009.

IDC placed much of the blame squarely on Microsoft’s shoulders. Not only did the “radical changes” in Windows 8 fail to ignite PC sales the way Windows 7 did, but the fizzled launch also “appears to have slowed the market.”

Gartner adds that weak system sales in the industrialized world can’t be healed by strong shipments into developing markets. “Consumers are migrating content consumption from PCs to other connected devices, such as tablets and smartphones,” the firm said. That trend seems to hold true everywhere you look these days.

It’s been a frustrating path for Microsoft investors, who have watched the company fail to capitalize on the incredible growth in mobile over the past decade. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He’s also providing regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”,

From: http://www.dailyfinance.com/2013/04/11/blame-microsoft-for-tech-stocks-dragging-on-the-do/

By Anders Bylund, The Motley Fool

Why This Important Dow Stock Jumped 1.5% Today

April 10, 2013 Bartle Doo Leave a comment

Filed under: Investing

IBM is a giant among Dow stocks. The IT hardware and services veteran accounts for 11% of the Dow Jones Industrial Average index by weight, and its price swings always make a big difference to the Dow’s daily value changes.

This morning, Big Blue‘s shares jumped as much as 1.5% on an analyst upgrade. That’s enough to add 25 points to the Dow’s overall value, thanks to IBM‘s $211 share price, and a major driver of today’s bullish Dow action.

The fuel for this morning’s rocket ride came from star analyst Steve Milunovich, formerly of Merrill Lynch but now a managing director at Swiss powerhouse UBS. Milunovich is the kind of rainmaker who can move even blue-chip mega caps like IBM with a stroke of his pen.

In this case, Milunovich boosted IBM from “hold” to “buy” with a $235 price target. That would be a 12% upside to Tuesday’s closing prices.

He paints Big Blue as a company in transition, “well positioned” to become a leader in so-called “IT-as-a-service” cloud computing. That’s a model where businesses kick their IT operations out as a stand-alone business or divisions, moving a traditional cost center into the realm of flexible and potentially profitable operations.

These IT-focused entities are often powered by advanced cloud-computing solutions and big outsourcing contracts — two areas where IBM is both huge and growing.

Milunovich calls this a “sound strategy,” and it’s hard to disagree.

IBM has been heading in this direction for many years now, but the IT-as-a-service trend is primed for massive growth in the near future as the idea enters the mainstream. IBM stock has already crushed its Dow Jones peers over the last five and 10 years, and it’s likely to keep on keeping on.

IBM data by YCharts.

So this man among Dow stock boys looks primed for further gains. Milunovich sees a 12% return for the next year, and I believe that’s an appropriate long-term growth rate for the next five years as well. In fact, I just started a long-term outperform CAPScall on IBM to underscore the comprehensive power of IBM‘s cloud-focused industry muscle.

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The article Why This Important Dow Stock Jumped 1.5% Today originally appeared on Fool.com.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out

Source: FULL ARTICLE at DailyFinance

IBM's Challenges Could End the Dow's Record Run

By Dan Caplinger, The Motley Fool

Filed under: Investing

Lately, whenever stock markets have appeared on edge, the solution has involved central bank intervention. Today, it was the Bank of Japan‘s turn to add some stimulus to the global economy, with an ambitious program of asset purchases and monetary expansion in an attempt to stem the decades-long negative impact of deflation on the island nation’s economy. The greatest impact from the move came in Tokyo, where the Nikkei reversed an early slump to rise more than 2%. But even as European stocks slumped, the Dow Jones Industrials managed to take the BOJ‘s move and build on it, climbing more than 55 points.

IBM , though, fell 0.6%, which made it the biggest loser in the Dow on a percentage basis. As numerous Fool contributors have noted earlier today, Oracle scored a big win in its challenge to IBM‘s strategy of dominating the Big Data market, when a study showed that Oracle’s technology performed better than IBM‘s. As troubling as that is for Big Blue, it ordinarily wouldn’t have a big impact on the broader stock market. But because IBM‘s share price is so high, it has a disproportionately heavy weighting in the price-weighted Dow. As a result, if IBM can’t resolve its problems, a stock decline could make it very hard for the Dow to advance overall.

Alcoa also fell 0.6% as investors prepare for the aluminum company to open the official earnings season on Monday. Despite persistent weakness in aluminum prices, the company is well-positioned to take advantage of rising demand for aircraft, automobiles, and other industrial applications. As Fool analyst Taylor Muckerman noted earlier today, Alcoa’s active attempts to streamline and optimize its business should prepare it to benefit greatly from the next cyclical upturn, even if the company goes through more pain in the short run.

Finally, Greenbrier fell more than 4% after beating earnings estimates, but falling well short on overall sales. The railroad-services company said that deliveries fell 27% during the quarter, leading to a decline in revenue of nearly 8%. Perhaps, more importantly, Greenbrier shareholders seemed dissatisfied with the way the company has moved forward after rejecting a merger bid with American Railcar Industries that activist investor Carl Icahn had tried to broker. Even with expectations of better sales ahead and a cheap valuation, Greenbrier can’t seem to inspire confidence among investors.

Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Controlling about 15% of global production in this highly consolidated industry, Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160 billion by 2017. Based on this prospect and several other company-specific factors, Alcoa is certainly worth a closer look. For a Foolish investment perspective on this global giant, simply click here now to get started.

Japan, Major Announcements Drive Dow Thursday

By John Divine, The Motley Fool

Filed under: Investing

Providing yet another reminder of how interconnected global markets are, U.S. stocks advanced today on news of a proposed $1.4 trillion injection into Japan‘s economy by the country’s central bank. This is notable because the move nearly doubles Japan‘s monetary base by the end of next year. As a result, Wall Street is optimistic that the stimulus can help Japan emerge from 20 years of minimal growth. The Dow Jones Industrial Average which added 55 points, or 0.4%, also saw a few big-time announcements from its components, and ended the day at 14,606.

Rebounding from a steep decline in the prior three trading days, Hewlett-Packard shares rose 1.8% today to lead the index. HP had fallen in recent days on analyst sentiment that the stock was overvalued after a huge run-up in 2013 — its meteoric 56% rise this year still tops the index by far. The biggest news from HP actually came after the markets closed: the chairman of HP‘s board, Raymond Lane, is giving up his leadership position. Two other board members are resigning, making for an uncertain future at the top of the company.

International Business Machines slipped 0.6%, to end as one of the weakest blue chips today. Its decline, though hardly extreme and not substantiated by any major revelations, comes as Big Blue defends itself against claims from rival server manufacturer Oracle . IBM rushed to combat various assertions from Oracle that IBM‘s server offerings are slower than Oracle’s, claiming that the comparisons used outdated IBM products.

But, by far, the biggest news out of the Dow today came from AT&T . Taking the stage with Facebook‘s Mark Zuckerberg, AT&T Mobility CEO Ralph de la Vega excitedly announced that AT&T would be the exclusive service provider on the new HTC First smartphone. The First will indeed be the first smartphone that’s built with Facebook’s new Home interface to hit the markets, and could be a big win for the service provider. For Facebook, today marked a new era in the company’s quest to integrate social media with mobile devices.

After the world’s most-hyped IPO turned out to be a dunce, most investors probably don’t even want to think about shares of Facebook. But there are things every investor needs to know about this company. We’ve outlined them in our newest premium research report. There’s a lot more to Facebook than meets the eye, so read up on whether there is anything to “like” about it today, and we’ll tell you whether we think Facebook deserves a place in your portfolio. Access your report by clicking here.

var FoolAnalyticsData = FoolAnalyticsData || []; …read more

Why the Dow Is Struggling to Hold On Today

By John Maxfield, The Motley Fool

Filed under: Investing

Earlier today, it looked as if yesterday’s losses were behind us, as the Dow Jones Industrial Average had rallied more than 70 points in morning trading. However, it dipped into negative territory and then clawed its way back for a modest gain of 37 points, or 0.26%, by 3:15 p.m. EDT.

The obvious indecision in the market today stems from two countervailing factors. On the one hand, the Department of Labor reported today that significantly more Americans filed for unemployment last week than had been anticipated by economists. For the final week of March, 385,000 people submitted applications for unemployment benefits. That was 28,000 more than had filed in the prior week, and it greatly exceeded the expected figure of 350,000. According to an economist quoted by The Wall Street Journal, “Whether this is a genuine change in the trend or not, today’s data will undoubtedly only compound fears that growth is slowing significantly again.”

Alternatively, news that the Bank of Japan is initiating an aggressive policy of monetary easing spurred on the market‘s bulls. As I discussed earlier today, the Asian country’s central bank is making good on its promise to achieve a 2% rate of inflation after two decades of persistent deflation. To reach its goal, it has committed to doubling its monetary base “with a time horizon of about two years.” The news sunk the Japanese yen and sent the country’s primary stock index higher.

The best-performing stock on the Dow this afternoon is AT&T . As my colleague Dan Dzombak discussed earlier, rumors surfaced yesterday that the company may team up with its rival Verizon to buy Vodafone. Those rumors were subsequently denied. Today, however, Facebook introduced its new Facebook Home service, which will initially be featured exclusively on HTC phones offered by AT&T.

Alternatively, the worst-performing stock on the Dow is IBM . As noted earlier by fellow Fool Jessica Alling, the company has been fighting to ward off concern over a recently released study suggesting that Oracle is outperforming Big Blue when it comes to new chips and servers — two of IBM‘s strong suits.

Profiting from our increasingly global economy can be as easy as investing in the U.S. of A. The Motley Fool’s free report “3 American Companies Set to Dominate the World” shows you how. Click here to get your free copy before it’s gone.

The article Why the Dow Is Struggling to Hold On Today originally appeared on Fool.com.

John Maxfield 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 …read more

Source: FULL ARTICLE at DailyFinance

Tech Stocks Fight the Rising Dow

By Matt Thalman, The Motley Fool

Filed under: Investing

The Department of Labor’s jobless-claims report was released this morning, and it wasn’t what investors were hoping for. Economists were expecting 350,000 claims last week, but the report indicated that the number was actually 385,000, which is 28,000 claims higher than the previous week. The 385,000 claims also represented the highest number of first-time claims in nearly four months.

But despite that dour data point, the Dow Jones Industrial Average is clinging to a 12-point gain as of 12:55 p.m. EDT. The S&P 500 is up 0.12%, and the NASDAQ is performing worst, having lost 0.15%.

The Dow’s biggest loser today is IBM , down 0.9%. And because Big Blue is the Dow’s most heavily weighted stock, its downward pressure is having a large effect on the blue-chip index. My Fool colleague Jessica Alling noted this morning that the company has been attempting to downplay an independent study indicating that Oracle‘s new chips and servers outperformed those produced by IBM. The company has long been seen as the top dog in the server realm, but it may now be losing some of its luster.

Another big technology Dow component losing today is Cisco . Investors have cut the share price by 0.19% just a day after Cisco announced that it would be purchasing the mobile connectivity company Ubiquisys. The privately held company provides technology which allows users to seamlessly connect across mobile networks. The $310 million purchase of Ubiquisys will allow Cisco to offer increased cellular data capacity in a more cost-effective way. To learn more about Cisco’s purchase and how it will help the company move one step ahead of the competition, click here.

Shares of Microsoft have fallen 0.44% thus far today. The decline comes after a Bank of America/Merrill Lynch downgraded the stock from a “buy” to “neutral”. The analyst making the call noted that the Windows product cycle has not performed as well as some had expected and that the company’s stock buyback program has failed to give the share price a boost.

It’s been a frustrating path for Microsoft investors, who’ve watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He’s also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

var FoolAnalyticsData = FoolAnalyticsData || …read more

Dow Tries to Rally, Leaves Tech Behind

By Jessica Alling, The Motley Fool

Filed under: Investing

After falling more than 100 points yesterday, the Dow Jones Industrial Average took a go at rallying earlier in trading, jumping 72 points after the Japanese central bank announced an accelerated QE policy this morning. But the gains were short-lived and the index fell again — though it remains in positive territory as of 11:45 a.m. Up 16 points, the Dow may have a fight ahead of it based on the weak economic news released so far this morning.

International news brought some good vibes to investors this morning as the Bank of Japan announced that it would be doubling its balance sheet by 2015 through accelerated bond purchases. The majority of the bonds would be long-term government paper as the bank tries to target a 2% inflation rate to spur on growth after years of deflation.

Yesterday’s weak labor market data really took its toll on the market, so today’s jobless claims report is likely to do the same. A spike in new claims surprised analysts, who expected claims to drop by 7,000 to 350,000 — instead, new jobless claims rose to 385,000 last week. Investors should pay close attention to tomorrow’s employment situation report, which could bring some positive news, but if it supports the trend of a softening labor market, then the Dow could be headed back south.

Tech gets left in the dust
Of the Dow’s 30 component stocks, three major tech players were in the red this morning: Intel , IBM , and Microsoft .

Intel has had some positive news lately regarding its push to join the smartphone race, with its Atom Clover Trail+ processor in the Lenovo IdeaPhone K900 beating out the new Samsung Galaxy S4’s ARM CPU in benchmark tests. The chip maker is also expanding its mobile presence in the Chinese market, with an exclusive partnership with ZTE, China‘s second-largest mobile manufacturer. Closer to home, Big Blue is still dealing with its long-running antitrust case regarding the marketing of its microprocessors. Citing a recent Supreme Court case, Comcast v. Behrend, Intel is looking to have the defendants’ right to sue as a class rejected, which could lead to settlements if the company’s motion wins.

IBM has been trying to downplay the recent independent benchmark tests that showed the new chips and servers from rival Oracle outperformed the company’s own products. The continued race for speed and low cost has always dominated the industry, and IBM has to begin to find new ways to win. The tech giant is working on other projects, which have helped it along so far. Its big data push has been moving along, with the company announcing new improvements and advances for the Hadoop System that will accelerate performance and simplify administration.

Microsoft took a blow this morning with Bank of America/Merrill Lynch analysts’ downgrade of the company from “buy” to “neutral,” along with a lower price target. Some are concerned that Mr. Softy won’t …read more

By John Divine, The Motley Fool

Cliffs Rebounds, and the Dow Ends Higher

March 28, 2013 Bartle Doo Leave a comment

Filed under: Investing

In the final trading day of the first quarter — the markets will be closed tomorrow for Good Friday — Wall Street had a handful of catalysts to drive it higher. A secular rebound in the housing market, coupled with continued Federal Reserve stimulus measures and increasing corporate profits, helped drive the Dow Jones Industrial Average 52 points, or 0.36%, higher, to end at 14,578.

A Wall Street Journal article highlighting the quickly growing demand for supercomputers — sales for the high-end machines surged nearly 30% last year to reach $5.6 billion annually — bodes well for International Business Machines , which added 1.1%. Big Blue makes a chip for supercomputers that uses less electricity than other competitors; that’s a major advantage, as extra performance tends to require a very high level of electricity to function.

One of the biggest energy companies in the world, Chevron , declined 1.1%, to end Thursday as the worst-performing blue chip stock. Investors may be selling off after comments from Utah’s Governor that essentially promised that the state would be forcing Chevron to clean up its most recent spill in the state. It’s the third Chevron spill in Utah in three years, causing the governor to chastise federal environmental regulators, and take a hard line against the pipeline operator.

Fossil fuel refiner and marketer Phillips 66 added 2.5%, after agreeing to raise around $300 million in an IPO that will sell off a small part of its current business that deals with the operation and development of a variety of its midstream assets. It didn’t hurt, either, that Phillips has been on a roll all this year: its stock is up more than 30% in the first quarter alone.

Lastly, shares of Cliffs Natural Resources rose 3%, bouncing back from a dismal showing yesterday, where shares ended as the worst performers in the entire S&P 500. After Wednesday’s monumental 13.9% haircut, the extreme bearishness on the heels of a scathing analyst downgrade yesterday brought out bargain hunters today, which helped the stock gain a small portion of its losses back.

Cliffs Natural Resources has grown from a domestic iron ore producer into an international player in both the iron ore and metallurgical coal markets. It has also underwhelmed investors lately, especially after its dramatic 76% dividend cut in February. However, it could now be looked at as a possible value play, due to several factors that are likely to remain advantageous for Cliffs’ management. For details on these advantages and more, click here now to check out The Motley Fool’s premium research report on the company.

var FoolAnalyticsData = FoolAnalyticsData || []; …read more
Source: FULL ARTICLE at DailyFinance

By Jessica Alling, The Motley Fool

Did the Dow Catch a Virus From the Tech Sector?

March 21, 2013 Bartle Doo Leave a comment

Filed under: Investing

The Dow Jones Industrial Average closed higher yesterday following the Fed’s announcement that it would continue with its quantitative easing program until there are more improvements in the labor market. With fresh assurances that there would be no increases in interest rates or other changes on the way, investors pushed the Dow to a new intraday high, and ultimately to a 55-point gain.

Today we’re seeing a much different picture — 25 of the Dow’s 30 component stocks are in the red, with the technology sector sporting the biggest losses. Cisco is the leader of the pack so far in trading, down 3.53% just before 11 a.m. The networking giant was recently downgraded by Wall Street analysts, who cited weaker demand for its products. This coincides with the bad news from Oracle last night that it is seeing a weaker environment, creating lesser demand across all of its tech segments, which sent its stock into a nosedive. Oracle has been down by as much as 10% today, and is currently down 9%. It wouldn’t be a stretch to assume that Cisco is feeling some negative effects from Oracle’s announcements.

IBM is also down this morning, trading at a 2.22% loss so far. Despite winning a new contract with the state of Ohio for a tech upgrade and its recent success with its Boston “smart city” collaboration, Big Blue has a cloud hanging over its head. Polish authorities are investigating a bribing scheme that involved a high-ranking member of the Polish government who determined the winners of lucrative government contracts. IBM has made it clear that the investigation only includes the work of a former employee. Also implicated in the investigation are Hewlett-Packard and Oracle.

HP is down 1.07% this morning. On top of the Polish investigation, shareholders demonstrated their frustration with the company’s botched Autonomy deal through their votes on the re-election of HP‘s board of directors. Though all candidates up for re-election won, there were some very close calls, including for chairman Ray Lane‘s seat. Perhaps in a move to assuage shareholders, the board approved a 10% increase in the company’s dividend. The new payout will raise the per-share dividend from $0.132 to $0.1452, increasing HP‘s costs of distribution by $106 million. Though the company reported a 16% decrease in profits for its first quarter last month and there is continued pressure from the changing personal computing environment, HP is looking to increase value to shareholders.

The massive wave of mobile computing has done much to unseat the major players in the PC market, including Hewlett-Packard. However, HP‘s rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool’s technology analyst details exactly what investors need to know about HP in our new premium research …read more
Source: FULL ARTICLE at DailyFinance

By Jessica Alling, The Motley Fool

Dow Approaches 10-Day Record With A Little Help

March 14, 2013 Bartle Doo Leave a comment

Filed under: Investing

The Dow Jones Industrial Average hit a major milestone yesterday when it finished the day five points up to mark the ninth straight session of gains. Though the index has barely skated by the breakeven mark for the past two days of trading, many believe the Dow is about to extend the streak to 10 days. As of noon, the Dow is up 59 points, or 0.41%. With the momentum behind it, the index may also be instilling greater confidence in the market as a whole, helping the S&P 500 come within 10 points of its 2007 high.

A little help
Good economic news today may be one of the the Dow’s streak is set to continue. Jobless claims fell for the latest reported week, and as we see more and more decreases, it points to a firmer underlying labor market. The rolling four-week average of jobless claims fell to 346,750 — the lowest level in five years.

The producer price index was bolstered once again by gas prices, as the February numbers showed a 0.7% increase compared with a 0.2% improvement in January. The gas price spike during the month created the largest jump in the PPI the economy has seen in five months, but the results stayed in line with analyst expectations.

Chevron may be getting a boost from this morning’s PPI data: The gas company is up 1.5% so far today. The company is also benefiting from rival Exxon‘s prediction that American oil-production will increase 45% by 2040. Chevron has stated that it’s on track to increase its production volume by 25% by 2017. Most American gas and oil companies continue to see improvements thanks to increased shale opportunities.

The twin frontrunners on the Dow today are Hewlett-Packard and IBM , both up more than 1.5%. HP‘s continued struggle with its botched Autonomy deal has opened a new chapter, as the U.K.’s Serious Fraud Office has opened an investigation into the allegations that the British-based company willfully inflated its sales figures to boost its acquisition price. Despite the Autonomy mess, investors are still looking for HP to rally, with 5,000 calls bought late in yesterday’s session signaling an expectation for the stock‘s price to rise to $23 by mid-April.

Big Blue has been all over the news lately, giving investors plenty of reasons to get excited. That excitement pushed IBM to its all-time high yesterday. The tech giant has been working with the city of Boston to improve systemwide initiatives like traffic, water management, and airport logistics. So far, the Massachusetts Water Resources Authority has been able to use IBM‘s predictive software successfully and has cut down on its work orders by 38% by reducing unnecessary maintenance. IBM is also looking to expand its use of Watson, the supercomputer that won on Jeopardy! and has since helped doctors improve the speed and quality of care for cancer patients. Students were asked for ideas that Watson …read more
Source: FULL ARTICLE at DailyFinance

By Anders Bylund, The Motley Fool

How Buybacks Change the Game for IBM

March 13, 2013 Bartle Doo Leave a comment

Filed under: Investing

The wealth-building power of compound interest will never cease to amaze me.

It’s a story of patience and attention to detail, where small, short-term differences add up to massive divergence over decades. And in the end, the biggest winners don’t always deliver the fattest share-price returns.

Sometimes, it’s not even about having the most generous dividend policy. Let’s call in IBM to show you what I mean.

Big Blue has totally crushed its peers on the Dow Jones Industrial Average over the last two decades. Over this time, the stock price has soared by 1,580% while the Dow eked out an 83% gain. Throw in dividend reinvestments along the way and the Dow jumps to a 152% gain. IBM‘s total returns balloon to 2,59%.

Source: Google Finance.

Dividend checks over this period added up to $31 billion, which would have been enough to buy the entire company twice in 1993. That alone would be more than enough to beat the Dow’s average returns, even if share prices had stayed flat throughout.

That being said, dividends actually play a rather small part in IBM‘s efforts to return cash to shareholders. Prepare to be amazed.

Source: S&P Capital IQ.

That thin blue line at the bottom of this chart is IBM‘s dividend payouts that made such a big difference in our discussion above. Wouldn’t you agree that it looks tame next to the much fatter share buybacks?

In these two decades, IBM has collected $186 billion in free cash flows and pumped 66% of it, or $123 billion, right back into share repurchases. Sure, IBM would still have beaten the Dow quite comfortably without these buybacks, but the effort more than doubled the total value of your 1993 investment. Who’s complaining about an additional nine-bagger?

The company has occasionally returned more cash to its owners than operations were able to crank out. That was the case in the late 1990s, when shares were cheap and IBM went through a serious rebuilding phase. It was true again in 2007, when the company borrowed $12 billion to retire $14.7 billion worth of shares. And Big Blue is tapping into the debt market right now while borrowed capital is cheap.

Last year, the company spent $3.8 billion on dividends and $10.5 billion on buybacks. If all that cash were funneled into dividends instead, the effective yield today would have jumped from 1.6% to a fantastic 6%. Don’t forget about buybacks when thinking about management’s generosity toward shareholders.

If you’re looking for some long-term investing ideas, check out the Fool’s special report: “The 3 Dow Stocks Dividend Investors Need.” It’s absolutely free, so just click here and get your copy today.

The article How Buybacks Change the Game for IBM originally appeared on Fool.com.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders’ bio and holdings …read more
Source: FULL ARTICLE at DailyFinance