CHICAGO, June 12, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the IBM Corp. (NYSE:IBM-Free Report), Intel (Nasdaq:INTC-Free Report), Taiwan Semiconductor Manufacturing (NYSE:TSM-Free Report), Oracle (NYSE:ORCL-Free Report) and SAP AG (NYSE:SAP-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
IBM Selling Chip Manufacturing Biz
Reportedly, IBM Corp. (NYSE:IBM-Free Report) has agreed to sell its loss-making chip manufacturing unit to Globalfoundries. Although the financial details of the deal are not available, it is rumored that the sale-price is approximately $1.0 billion -- much lower than IBM's initial expectation of $2.0 billion.
Although the server unit attracted a number of other suitors such as Intel (Nasdaq:INTC-Free Report) and Taiwan Semiconductor Manufacturing (NYSE:TSM-Free Report), we believe that IBM's unimpressive results compelled it to divest the unit in a hurry to avoid further decline in valuation.
IBM had been looking for ways to divest the business for quite some time. It had hired Goldman Sachs for this purpose. However, the company eventually backed away from the idea of divestiture and instead sought for a joint venture.
IBM believed that a joint venture will enable the company to have control over the design and intellectual property of the chips. Eventually, IBM entered into a joint venture with Globalfoundries in 2012.
Currently, Globalfoundries seems more interested in acquiring IBM's intellectual property (IP) and technological knowhow rather than its manufacturing capability since the latter is more than 10 years old and hence, has undergone considerable depreciation. Globalfoundries, which already has a technology joint development project with IBM, will continue to act as the supplier for IBM's microprocessors.
IBM's growing challenges in the hardware segment improved Globalfoundries' bargaining power. In the first quarter, IBM's hardware revenues declined 23.0% from the year-ago quarter. Management noted that the company faced headwinds related to power, storage and System X in the hardware segment, which negatively impacted results.
Nevertheless, we believe that the sale of the loss-making business will boost IBM's profitability, going forward. Moreover, it will help the company to focus more on its fast growing software and services business. We also believe that the divestiture would reduce significant competition for IBM.
We believe that strategic acquisitions, divestiture of non-core businesses, investments in fast growing markets such as cloud computing and analytics business will boost the top line in 2014.
Moreover, aggressive share buyback will boost profitability. However, sluggish enterprise IT spending and intensifying competition from the likes of Oracle (NYSE:ORCL-Free Report) and SAP AG (NYSE:SAP-Free Report) in the software business are headwinds in the near term.
Currently, IBM has a Zacks Rank #3 (Hold).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on IBM - FREE
Get the full Report on INTC - FREE
Get the full Report on TSM - FREE
Get the full Report on ORCL - FREE
Get the full Report on SAP - FREE
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO
SOURCE Zacks Investment Research, Inc.
Share this article