Topic: Growth Stocks

The Wall Street Stock Forecaster Hotline – Friday, July 31, 2009

Article Excerpt

INTERNATIONAL BUSINESS MACHINES CORP., $117.93, New York symbol IBM, announced this week that it will buy SPSS Inc. (Nasdaq symbol SPSS). Chicago-based SPSS makes software that analyzes sales and other data. This helps its clients predict how their customers will react to such things as price changes and new advertising campaigns. IBM will pay $1.2 billion for SPSS when the deal closes later this year. To put the purchase price in context, IBM earned $3.1 billion, or $2.32 a share, in the three months ended June 30, 2009. That’s up 12.2% from $2.8 billion, or $1.97 a share, a year earlier. Revenue fell 13.3%, to $23.25 billion from $26.8 billion. IBM gets 65% of its revenue from overseas markets, and the high U.S. dollar hurts the value of their contribution. However, IBM gets roughly 80% of its revenue from selling computer services and software. These generate higher profit margins than computer hardware. That’s why its earnings rose despite the lower revenue. IBM…