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Monday, July 17, 2006

Widely Traded 48 Hours Clock: IBM

24/7 Wall St. has begun coverage of the 36 most widely traded stocks, eighteen each from the NYSE and the NASDAQ. Most of these stocks trade over 50 million shares a week. This new feature will highlight each of the 36 stocks at least every 48 hours giving investors fresh infomation and perspective on the companies whose shares are most likely to move the broader markets.

Stock Ticker: IBM

What we should all be asking is this: How much bad news has been priced into IBM? We have a horrible tech sector with earnings warnings being rampant in the last 3 weeks. The global turmoil is acting as a further excuse for companies to delay orders. The economy is slowing. Rates are staying high, and energy prices are causing companies to slightly curb spending in other areas.

So once again, how much is priced into IBM? IBM didn't issue an earnings warning when the others did and when they could have, so you may try to assume the quarter was ok. What is the probably wildcard is the coming quarter(s). It seems soft in general, although it seems as though business is still getting being done. Some orders have been pushed back in IT, but they haven't been completely severed or cut out indefinitely. We still also only have right at 5.02 million shares that have traded hands, which is odd considering that average daily volume is over 6 million shares per day and this is the day of earnings.

IBM is still a technology play, but they are no longer in the PC bsuiness after selling out to Lenovo last year. On that topic it should be recalled that the analysts have had a hard time adequately reversing engineering those old revenues out of the companies "future revenues".

We'll have to see how the shares get treated after the company discloses whatever its forecast is. We know the sector is weak and IBM is essntially trading under the old 52-week lows. It is even close to the old 2-year lows.

Projected EPS is expected to be $1.29 and revenues are expected to show a reading of $21.9 Billion.

Jon C. Ogg
July 17, 2006
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