Big Blue Beats Street

International Business Machines (IBM $81.98, down $2.94) beat Wall Street estimates after the market closed on Tuesday and got a lift in after-hours trading. The company reported a profit of $3.28 a share on sales of $27 billion, versus $2.80 a share on revenue of $28.9 billion last year. Wall Street had expected IBM to earn $3.03 on $28.15 billion in sales. Although the firm missed on its revenue numbers, IBM improved its profit margin to 48% or 3% better than the year-ago period. The company also provided a higher outlook on 2009 profits saying it expects to earn at least $9.20 a share. Wall Street’s had IBM’s profit at $8.75 for the year. In after-hours trading, IBM was up 4%, or $3.37, to $85.35. The gains may carry over into today but I wouldn’t go long on IBM just yet. The stock has a good chance of extending its turnaround but the market is facing strong headwinds. Until we see some signs of a rally or another catalyst, put options seem to be working in the current market environment. Rick Rouse Rick@OptionsMentoring.com]]>

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