Dow fell 41, advancers over decliners almost 2-1 & NAZ backed off 17. The MLP index rose 4 to the 463s (closing in on the 468 record hit last May) & the REIT index inched up a fraction in the 274s. Junk bond funds were fractionally higher & Treasuries retreated. Oil was strong but gold slid back.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
IBM's, a Dow stock, server business is dragging down sales & profits, hurting the division’s value just as Lenovo is said to be considering acquiring the asset. IBM’s revenue declined for a 7th straight qtr amid plunging demand for its x86 servers. The slump weighed on the hardware unit, where profit slid $750M in Q4 from last year because of “business model issues due to market shifts,” CFO Martin Schroeter said. It is believed that Lenovo, the world’s largest maker of personal computers, is the potential buyer. Discussions with IBM brok up in May over the price of the asset, then valued at $2.5-$4.5B, & the unit’s performance has continued to decline since. IBM’s x86 servers have become a commodity item amid increasing competition. The x86 division is only one of several headaches for IBM’s hardware unit. While x86 sales were down 16% from a year earlier, overall systems revenue declined 25%, including a 37% fall in mainframes & a 31% drop in servers based on IBM’s own Power chips. Lenovo said yesterday it’s in preliminary talks on a possible acquisition, without identifying the target or seller. IBM is getting rid of businesses with lower profit margins to focus on software & services to reverse declining sales. Lenovo, which began its rise to the top spot in the global PC market by acquiring IBM’s unit in 2005, is looking to counter falling industry shipments by expanding into storage equipment & servers that run corp networks. The stock sank 6.18.
IBM Falls After Citing Challenges at Server Unit Lenovo Is Said to Pursue
Boeing, another Dow stock, delivered a record number of jets to China last year & expects to hand over a similar number this year as growth in the the economy spurs demand for air travel. Deliveries this year will be about 140 aircraft after handing over a record 143 last year, Marc Allen, president of Boeing China, said. BS, which delivered a record 648 jets worldwide, also secured orders for more than 230 new aircraft from the country last year, he said. Asian growth is lifting orders with China forecast to supplant the US as the world’s largest market by 2032. China’s economic expansion is helping air travel affordable to more people, increasing demand for planes from carriers such as Air China & China Southern Airlines. “Wow, a really fantastic year,” Allen said. “What I am even more excited about is that we see a trajectory. I can announce today that we expect to maintain that rate in 2014 and into the foreseeable future.” China Southern, Asia's biggest airline, took deliveries of 37 aircraft last year, the 2nd most among carriers worldwide, lagging behind only American Airline's 39. BA’s 1355 net orders for 2013 was the 2nd-highest annual sales tally, & an increase from 1338 a year earlier. The stock went up 2.70.
Boeing Expects to Deliver 140 Planes to China in 2014
McDonalds, another Dow stock, denied a magazine report that it avoided paying taxes related to more than $3B of revenue in France since 2009, saying inspections by fiscal authorities at its French unit were routine. MCD said that it “firmly refutes” the allegation by L’Express. The magazine reported that the French finance ministry suspects MCD of reducing its tax obligations by redirecting revenue via branches in Geneva & Luxembourg, but there were no sources in the article. “From the corporate standpoint, we also can share that McDonald’s complies with applicable laws and regulations in the countries and jurisdictions where we operate our global business,” Becca Hary, a MCD spokeswoman said. The company has more than 1200 stores in France with 314 franchisees that have paid €1B ($1.4B) in corp taxes since 2009. MCD stock lost pocket change.
McDonald’s Denies Magazine Report of French Tax Avoidance
Stocks crawled higher in a cautious manner. Earnings are sort of good, but many times favorable results are due to accounting adjustments & non recurring items. Higher revenue tends to be lacking. Today the Dow was dragged lower by IBM, plus 1% declines at Caterpillar (CAT), P&G (PG) & Intel (INTC). Only 12 of the 30 stocks were winners. But there were buyers for yield sensitive stocks. All is not well as the stock market rally enters its 6th year.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.03% | |
U.S. 2-year |
0.40% | |
U.S. 10-year |
2.86% |
IBM's, a Dow stock, server business is dragging down sales & profits, hurting the division’s value just as Lenovo is said to be considering acquiring the asset. IBM’s revenue declined for a 7th straight qtr amid plunging demand for its x86 servers. The slump weighed on the hardware unit, where profit slid $750M in Q4 from last year because of “business model issues due to market shifts,” CFO Martin Schroeter said. It is believed that Lenovo, the world’s largest maker of personal computers, is the potential buyer. Discussions with IBM brok up in May over the price of the asset, then valued at $2.5-$4.5B, & the unit’s performance has continued to decline since. IBM’s x86 servers have become a commodity item amid increasing competition. The x86 division is only one of several headaches for IBM’s hardware unit. While x86 sales were down 16% from a year earlier, overall systems revenue declined 25%, including a 37% fall in mainframes & a 31% drop in servers based on IBM’s own Power chips. Lenovo said yesterday it’s in preliminary talks on a possible acquisition, without identifying the target or seller. IBM is getting rid of businesses with lower profit margins to focus on software & services to reverse declining sales. Lenovo, which began its rise to the top spot in the global PC market by acquiring IBM’s unit in 2005, is looking to counter falling industry shipments by expanding into storage equipment & servers that run corp networks. The stock sank 6.18.
IBM Falls After Citing Challenges at Server Unit Lenovo Is Said to Pursue
International Business Machines (IBM)
Boeing, another Dow stock, delivered a record number of jets to China last year & expects to hand over a similar number this year as growth in the the economy spurs demand for air travel. Deliveries this year will be about 140 aircraft after handing over a record 143 last year, Marc Allen, president of Boeing China, said. BS, which delivered a record 648 jets worldwide, also secured orders for more than 230 new aircraft from the country last year, he said. Asian growth is lifting orders with China forecast to supplant the US as the world’s largest market by 2032. China’s economic expansion is helping air travel affordable to more people, increasing demand for planes from carriers such as Air China & China Southern Airlines. “Wow, a really fantastic year,” Allen said. “What I am even more excited about is that we see a trajectory. I can announce today that we expect to maintain that rate in 2014 and into the foreseeable future.” China Southern, Asia's biggest airline, took deliveries of 37 aircraft last year, the 2nd most among carriers worldwide, lagging behind only American Airline's 39. BA’s 1355 net orders for 2013 was the 2nd-highest annual sales tally, & an increase from 1338 a year earlier. The stock went up 2.70.
Boeing Expects to Deliver 140 Planes to China in 2014
Boeing (BA)
McDonalds, another Dow stock, denied a magazine report that it avoided paying taxes related to more than $3B of revenue in France since 2009, saying inspections by fiscal authorities at its French unit were routine. MCD said that it “firmly refutes” the allegation by L’Express. The magazine reported that the French finance ministry suspects MCD of reducing its tax obligations by redirecting revenue via branches in Geneva & Luxembourg, but there were no sources in the article. “From the corporate standpoint, we also can share that McDonald’s complies with applicable laws and regulations in the countries and jurisdictions where we operate our global business,” Becca Hary, a MCD spokeswoman said. The company has more than 1200 stores in France with 314 franchisees that have paid €1B ($1.4B) in corp taxes since 2009. MCD stock lost pocket change.
McDonald’s Denies Magazine Report of French Tax Avoidance
McDonald's (MCD)
Stocks crawled higher in a cautious manner. Earnings are sort of good, but many times favorable results are due to accounting adjustments & non recurring items. Higher revenue tends to be lacking. Today the Dow was dragged lower by IBM, plus 1% declines at Caterpillar (CAT), P&G (PG) & Intel (INTC). Only 12 of the 30 stocks were winners. But there were buyers for yield sensitive stocks. All is not well as the stock market rally enters its 6th year.
Dow Jones Industrials
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