IBM doesn't hear of 'Global Economic Slowdown'

The Technology Services and Computing Blue-Chip pre-announced its quarterly earnings Wednesday in an effort to boost confidence in not only its 52-week low stock price but also to provide a window into the upcoming economic effects facing 'Big Technology'. IBM (IBM), or Big Blue as it responds to in business circles offered a reassuring look into its future profitability despite the economic fears that have plagued all industry.

IBM told investors to expect at least $8.75/share in profits for the year, which is in-line with previous forecasts from the company, and a quarterly profit of $2.05/share beat analysts estimates of $2.01. The news had IBM stock up about 5% in the after-hours market, and the company continues to hover with a 3% gain this morning at the open.

While IBM is well represented on the technology side within the Financial Industry, the company hopes its long-term contracts hold up well against the failures in banking. Clearly as banks go belly up so do their IT departments and eventually so would all of their IBM server hardware. IBM is not immune to a global business slowdown but the company appears to be weathering the latest storm rather well. Although Revenue came in below average expectations, those numbers were in the midst of being adjusted downwards for the current economic situation. Nonetheless Revenue climbed 5% year over year to $25.3Billion.

The IBM news will spread some good faith across the technology sector and you can expect the usual suspects to be in line for positive openings, Intel (INTC), Microsoft (MSFT), Oracle (ORCL) etc.

As the S&P struggles to finish in the green just one of these October days so far, it could just be Big Blue that will push markets with a new found confidence into earnings season and allow a sliver of buying to turn into bargain hunting Investing on a large scale. With yesterday's positive afternoon turned into a sea of selling late in the day, Investors will want to wait and see if this holds.

One thing is holding and that's IBM's profitability!

Disclosure: Author holds no position in any mentioned companies

Major Techs hit 52-Week Highs, Can the Rally Continue?

Post Fed Meeting, stocks have been on the upswing with new highs seemingly being made daily. While the market has rallied broadly, will we see a pause or can the ride continue? The Dow still sits about 200 points from its highs, Nasdaq 50 and the S&P about 30. In other words, there are still gains to be made towards the end of the year.

Technology has been on fire lately, as early earnings reports have been positive and multi-national companies are cashing in overseas as the US dollar weakens against other major currencies. Oracle (ORCL) had a great quarter and hit a 52 week high of $22.17 on Friday. It wasn't alone as many major tech players were just at or set new highs at the end of trading on Friday. Those companies included Google (GOOG) at $560, Ebay (EBAY) at $39, Cisco (CSCO) at $32, Amazon (AMZN) at $91, Research In Motion (RIMM) at $93, BIDU (BIDU) at $285.

So what's the trade for Monday and the rest of the year? Success will come to those companies that are getting a majority of their revenue in International currencies. Due to the US Dollar's record decline against the Euro, European business will drive profits this quarter and next. Big Tech is in good shape to continue to rally into the next round of earnings numbers due to and increasing dependence on Worldwide business for accelerated growth.

It's seemed lately that you can toss money into any tech stock and watch it rise, however, to truly pick a winner into the end of the year it's important to stand back and pick apart the business and the stock's valuation and determine which bet is best. It's vital to look at growth projections and current valuations to see that AMZN with a P/E in the 120s and a forward P/E of 51, is a much shakier bet than high growth GOOG or RIMM who sport forward P/E's in the 30 as the latter companies can seemingly growth into P/E's in the 40s and 50s. Steady Oracle and Cisco, who are experiencing revitalized business growth sport forward P/E's around 18, and a strong case can be made that these companies deserve P/E's in the 20s going into next year.

Technology has gotten its spark with the market rally over the last week and this sector will be a good one to be in come Christmas and the last calendar quarter of the year. Investors should take heed and come up with a criteria of which Technology companies should become the best investments. Here's a primer of things to look for when evaluating potential technology investments this holiday season.

1) Which companies will create, advertise, sell or re-sell the upcoming must-have gadgets or be involved in the back end of another record online-shopping season.

2) Determine which companies sport the largest percentage of International business.

3) Determine which companies have the ability to mold into their inflated P/E ratios so that any downside risk can be minimized with strong growth.

Disclosure: Author is long GOOG