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After Hours Action: Apple, IBM

Two of the nation’s most important tech giants reported earnings after the bell. What must you know before you place your next bet?

AFTER HOURS ACTION: APPLE

Shares of Apple gained in extended trade after the company reported earnings that easily surpassed Street expectations, with sales of its iPad really getting investor attention.

In fact, all of Apple’s gadgets appear to be selling like hotcakes. The company sold 7.33 million iPads, 19.45 million iPods, 16.24 million iPhones and 4.13 million Macs.

Tablets appear to be gaining a toe hold at companies across the nation. "80% of the Fortune 100 are either testing or deploying iPads," says CNBC's John Fortt who monitored the conference call.

And the iPhone remains as popular as ever.

"Apple is still not able to satisfy demand for the iPhone 4, despite 16 million units sold," says Fortt. "They're working around the clock to work through the backlog."

Looking at the earnings a little more closely, Apple reported a profit of $6.43 a share in its fiscal first quarter, up from $3.67 a share last year with sales jumping to $26.74 billion.

Analysts who follow Apple forecast $5.40 a share on sales of $24.433 billion, according to a consensus estimate compiled by Thomson Reuters.

However, that’s not to say there are no concerns at Apple.

Shareholders were rattled over the long weekend by news that Steve Jobs, the company's iconic chief executive officer, is taking a medical leave of absence. The shares, which fell as low as $326 on the news, regained some lost ground later in the session.

How should you trade? What’s the play?

The trend in Apple tends to be a pop on earnings and then the stock sells off, says Pete Najarian.

The company is all about operating margins and at 29.3% they’re better than expected, says Guy Adami. If you have a longer term time horizon, as long as margins stay strong I think it remains a fantastic story.

Apple’s intra-day low was $326, says Joe Terranova. If you want to make a bullish bet I’d use that as a stop.

With the health of Steve Jobs coming under scrutiny again, I sold some Apple shares, admits Ryan Jacob of Jacob Internet Fund. Considering these developments I no longer think this stock should be the largest holding in my portfolio. But I still hold a position in Apple and if shares drop to around 10 times earnings net cash, I’m a buyer.

> For more information on Apple’s earnings report click here

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AFTER HOURS ACTION: IBM

Shares of IBM spiked in extended trade after the company posted quarterly results that exceeded analysts' expectations and raised its outlook for the fiscal year Tuesday.

"As IBM enters its second century, we will continue to focus on our long-term strategic initiatives—growth markets, Smarter Planet Solutions, cloud and business analytics—as we drive to achieve our new roadmap target of operating earnings per share of at least $20 in 2015," said Samuel J. Palmisano, CEO of IBM, in a prepared statement.


Taking a closer look at the numbers tech firm reported fourth-quarter earnings of $4.18 a share. Sales for the most recent quarter rose to $29.02 billion, up from $27.23 billion last year.
Analysts who follow the company expected IBM to earn $4.08 a share on revenue of $28.26 billion, according to a consensus estimate from Thomson Reuters.

In addition, the firm boosted its full year revenue guidance for 2011 to $13 a share, excluding one-time items. Analysts' earlier per-share consensus stood at $12.58 a share.

Also it's worth noting that on the conference call IBM said "they have competitive winds from HPQ, that can't be good for Hewlett-Packard," says Jon Najarian. "IBM is viewed by the Street as a more solid player in the space" due to the departure of Mark Hurd from rival H-P.

How should you trade? What’s the play?

IBM is becoming much more of a software and services company, reminds Zach Karabell, but it trades at a discount – as if it were still a hardware company. Even at current levels I’d still put new money to work.

I still think valuations are very fair in IBM, echoes Guy Adami. I think it trades between current levels and $200 over the next 6 months.

If you’re bullish, IBM’s intra-day low was $149.50, says Joe Terranova. Bulls should go long with a stop at that level. For me IBM results suggests orporate America is spending on software. That should bode well for SAP and Oracle, he says.

> For more information on IBM’s earnings click here.
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STREET FIGHT: GOLD

With gold closing higher on Tuesday, Brian Kelly decided to get back on the gold train while Zach Karabel ran in the other direction.

Who makes the better argument? Watch the video and decide for yourself!






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Trader disclosure: On Jan. 18, 2011, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karabell owns (AAPL); Karabell owns (C); Karabell owns (CREE); Karabell owns (CSCO); River Twice Capital owns (CSCO); Karabell owns (FCX); Karabell owns (FXI); Karabell owns (GE); Karabell owns (GS); Karabell owns (GOOG); Karabell owns (IBM); Karabell owns (POT); Joe Terranova Owns (GLD) Puts. Joe Terranova Owns (FCX) Puts. Joe Terranova Owns (UPL). Joe Terranova Owns (VRTS). Joe Terranova Owns (PVH). Joe Terranova Owns (GM). Joe Terranova Owns (CVI). Joe Terranova Owns (CNQ). Joe Terranova Owns (LTD). Joe Terranova Owns (C). Joe Terranova Owns (PEP); Pete Najarian owns (AAPL) call spreads; Pete Najarian owns (BAC) call spreads; Pete Najarian owns (BBY) calls; Pete Najarian owns (C); Pete Najarian owns (F) bonds and (F) calls; Pete Najarian owns (GE); Pete Najarian owns (HPQ) call spreads; Pete Najarian owns (MCD) calls; Pete Najarian owns (MSFT) call spreads; Pete Najarian owns (MS); Pete Najarian owns (YHOO); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK)

For Brian Kelly:
Accounts Managed By Kanunundrum Capital Own (FCX)
Accounts Managed By Kanunundrum Capital Own (GLD)
Accounts Managed By Kanunundrum Capital Own (LVS)
Accounts Managed By Kanunundrum Capital Own (MS)
Accounts Managed By Kanunundrum Capital Own (QCOM)
Accounts Managed By Kanunundrum Capital Own (SLV)
Accounts Managed By Kanunundrum Capital Are Short The Euro
Accounts Managed By Kanunundrum Capital Are Short The Yen

For Joe Terranova:
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Zach Karabell:
River Twice Capital owns (IBM); River Twice Capital owns (MSFT)
River Twice Capital owns (GS)
River Twice Capital owns (CREE);
River Twice Capital owns (POT)
River Twice Capital owns (QCOM)
River Twice Capital owns (RBCN)
Karabell owns (RIMM)
River Twice Capital is short (S)
River Twice Capital is short S&P 500; River Twice Capital is short Nasdaq 100 River Twice Capital Owns (SOLR)

For Ryan Jacob
The Jacob Internet Fund Owns (AAPL)

For Jeff Harte
Sandler O'Neill Has Received Investment Banking Compensation From (BAC), (C), (JPM) In Past 12 Months
Sandler O'Neill Expects To Receive/Seek Investment Banking Compensation From (BAC), (BK), (C), (JEF), (JPM), (NTRS) In Next 3 Months
Sandler O'Neill Has Received Non-Investment Banking Compensation From (BAC), (C), (GS), (JPM), (MS), (NTRS)
(BAC), (BK), (C), (GS), (JPM), (MS), (NTRS) Is A Client Of Sandler O'Neill (Non-Investment Banking Securities-Related Services)
(BAC), (C), (JPM) Was An Investment Banking Client Of Sandler O'Neill
Sandler O'Neill Is A Market Maker In (NTRS)

For Andy Busch
Busch does not have disclosures

For Scott Nations
Nations has no disclosures

For Guy Adami SOT
Adami had no disclosures on (MCD) on 12/7/2010




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