Diamonds and Dogs

7/18/19

Big Blue moving in the right direction? IBM (IBM) is up 4% following the usual lackluster earnings. IBM beat earnings thanks to share buybacks, but revenue declined 4%, the fourth consecutive quarterly decline for sales. However, IBM has completed the acquisition of Red Hat last week for $34 billion in cash. The deal is part of the company's effort to bolster their software division and hopefully create a catalyst for IBM to return a growth strategy.

Netflix (NFLX) has seen better days. The subscription video-on-demand service is down 11% to a six month low following earnings. Earnings were actually good with revenues rising 26% to $4.92 billion, but the guidance was pretty bad. Netflix lost 126,000 U.S. subscribers in the second quarter, vs. its forecast for a gain of 300,000. It also badly missed its target for international subscribers expecting to add 4.7 million international subscribers in the June quarter, but only brought in 2.83 million new subscribers. At least five downgrades for the stock today.