IBM, Intel earnings are dinging the Dow
Big Blue's big weighting in the index could have an outsize impact.
Both companies reported their third-quarter results Tuesday after the market closed. Unfortunately, the results were mixed.
First, let's take a look at Intel. In the quarter, the giant chip-maker reported earnings of $3 billion, or 58 cents a share, which beat the Street forecast of 49 cents.
Revenue fell by 5.5% to $13.5 billion. But that, too, was above the estimate of $13.22 billion.
So what was the problem? Well, guidance was weak. Intel says its Q4 is tracking for $13.6 billion in revenue, which compares to analysts' forecasts of $13.7 billion.
It's true that Intel has been investing heavily in tablets, especially ultrabooks. But it could take a while for the business to make up for the deterioration in the core PC market. However, Intel may benefit from market share gains it takes from ailing Advanced Micro Devices (AMD).
At IBM, Q3 earnings per share came in at $3.61, which was a beat by 1 cent. However, revenue was light, at $24.7 billion, versus a consensus of $25.3 billion. Shares of IBM were off 5.8% to $198.7 in afternoon trading Wednesday.
This is putting lots of pressure on the Dow Jones Industrial Average (keep in mind it's a price-weighted index and IBM accounts for about 12% of the index's moves).
As for fiscal 2012, IBM reaffirmed guidance of $15.10 in earnings per share. But analysts were looking for $15.15.
Unlike other mega tech companies, such as Hewlett-Packard (HPQ) and Dell (DELL), IBM has pulled off a successful transition of its business from hardware to software applications, which have juicy margins. What's more, Big Blue has also benefited from growth in mobile and cloud computing.
Despite all that, it still looks like the global economy is taking a toll as customers appear to be delaying purchases of technology, at least for the short run.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of "How to Create the Next Facebook." Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
More from InvestorPlace
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The US government is giving perks to foreign airlines, all at the expense of US companies.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.