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The Big Blue Bull

By Mark Whistler

Tickers in this Article: IBM, AAPL, DELL

I have to say, IBM's (NYSE:IBM) fourth quarter and full-year 2007 earnings look pretty good. The company's press release, announced "fourth-quarter 2007 diluted earnings of $2.80 per share from continuing operations, an increase of 24%, compared with diluted earnings of $2.26 per share in the fourth quarter of 2006." For the full year, the company announced, "diluted earnings of $7.18 per share, including five cents per share relating to the sale of the Printing Systems Division in the second quarter, an increase of 18% compared with diluted earnings of $6.06 per share in 2006."

Overcoming All Odds
I'm not a big fan of regurgitating simple earnings information, but with such strong numbers like these, I think it needed to be done. With that out of the way, investors are probably now trying to read between the lines. Here's what gives:

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In the press release, IBM chairman, president and CEO Samuel J. Palmisano stated, "The broad scope of IBM's global business - led by strong operational performance in Asia, Europe and emerging countries - drove these outstanding results." What we're really talking about is blistering diversification, something that has helped the company blow the doors off Wall Street, at the same time many other tech companies are struggling. It's no secret that we are now living in a global world and major companies that don't take steps to capture international revenue, are losing out. <INVESTOPEDIACONTENT>(To learn more about global investing, see What Is International Trade? and Re-evaluating Emerging Markets.)</INVESTOPEDIACONTENT>

Take Apple (Nasdaq:AAPL) for example, the company's innovative iPod and iPhone have helped the company sustain revenue on a global scale in an environment where most companies are seeing lackluster computer sales. Dell (Nasdaq:DELL) has yet to come up with a product fresh enough to keep up. And, the company's not really doing anything so spectacular on an international basis that we should expect news similar to IBM. All of the aforementioned simply points to the fact that tech companies must be on the ball, even more so now than in the luxuriously easier business years of the past half decade.

Cash is King
How can you argue with $16 billion in your bank account? That's right, IBM just reported holding $16 billion in cash. IBM is a business innovator and the balance sheets show exactly that. With so much "moola" in the bank, the company has plenty of wiggle room to implement new strategies both abroad and at home. Trading with a forward P/E ratio of 13 and at 1.4-times sales, the company is very attractively valued as well. And, with the company chugging full steam ahead, investors are also most likely very happy with the $1.60 dividend the company pays too.

Buy On The Rumor
At present, I wouldn't surprised to hear about a stock split sometime soon, as $103 a share may be slightly out of reach for some investors. Regardless, there's one thing investors may want to keep in mind; the old market adage, "buy on the rumor, sell on the news". What I'm saying is that while IBM is no doubt a good investment, those seeking to take positions, may want to buy the dips instead of chasing the stock, just to make sure they don't pick the top. It's just smart investing, even if the company is rock solid.

By Mark Whistler

Mark Whistler is a trader, author and analyst. He is the senior market strategist at TradingMarkets.com and heads the Forex Trading Service Forex Force.

His books include "Trade With Passion and Purpose" (2007), "Trading Pairs" (2004), "Profit from China" (2006) and "Profit from Uranium" (2006). Mark's newest book, "The Swing Trader's Bible", co-authored with CNBC/Fox News regular guest Matt McCall, will be on shelves in the summer of 2008.

Whistler is also the founder of WallStreetRockStar.com and writes regularly for TraderDaily.com. In his spare time, Whistler operates an art gallery in Baltimore, Md., along with Eats For The Streets, a growing organization - dedicated to helping the homeless across America.

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