Cihra said although hardware was the weakest performing area for IBM, it may start to improve in the second half of 2009. Overall, he expects IBM’s outlook to be rosier going into the third quarter — and recommended that investors buy.
“It looks like things have stabilized and should start to get better,” he said. “Currency should be less of a hit in the third quarter and it should start to help in the fourth…I think tech overall is holding up better than most—and within the enterprise [area], IBM is the one positive enterprise stock.”
Moran on Google
But the future may not be as bright for Google according to Moran.
“[The earnings result] wasn’t a beat,” said Moran. “In terms of the operating performance, it was in line with the expectations—the beat only came on the bottom line, and that was driven by a lower-than-expected tax rate. So in terms of the true operating metrics, it was really just an inline quarter.”
As the Internet advertising industry continues to struggle, Google’s management indicated there is no recovery in sight. Moran said Google relies heavily on its core search business so it will continue to face headwinds unless it finds ways to successfully diversify revenues.
“Advertising-driven stocks are not going to do well in the foreseeable future,” said Moran. “The ad market has not bottomed yet. There are no signs of recovery and as such, Google is not a place I’d be putting money.”
Cihra does not own shares of IBM.
Moran does not own shares of Google.
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