Stocks Set to Open Up on Solid IBM Results

AP Online
07-19-2005
Dateline: NEW YORK

A cleaning woman sweeps up the sidewalk in front of the IBM Building in New York, Sunday, July 17, 2005. IBM rebounded from a previous disappointment with second-quarter results announced Monday, July 18, 2005, that, buoyed by improvement in the services division, surpassed analysts' expectations. In the quarter that ended June 30, IBM showed net profit of $1.83 billion, or $1.12 per share, compared with $1.74 billion, or $1.01 per share, in the previous year. (AP Photo/Julia Drapkin)

U.S. stock futures are trading higher Tuesday after International Business Machines reported second-quarter results above Wall Street estimates. Traders will focus on the numerous blue-chip earnings to be reported during the day, including a report from Intel Corp.

Dow Jones futures were recently up 22 points, while Nasdaq futures were ahead 5 points and S&P futures were up 1.3 point.

IBM appeared to shake off its troubled start to the year, bouncing back in the second quarter with higher profit amid signs of renewed demand for its technology services. After the bell Monday, the company reported net income rose 5.4 percent to $1.83 billion, or $1.12 a share, from $1.74 billion, or $1.01 a share, a year earlier. IBM's income from continuing operations came in at $1.14 a share, well above Wall Street's expectations of $1.03 a share.

In Japan, the Nikkei 225 ended up 0.1 percent at 11764.84, with trading in the broader market cautious before Intel's results later Tuesday.

In London, the FTSE 100 index was recently higher 0.2 percent to trade at 5,215.5, with SABMiller PLC leading benchmark gainers after it agreed to buy Colombian brewer Bavaria from Santo Domino Group in a deal valued at $7.8 billion.

In other corporate news, Sanford Weill, who built a Wall Street empire over the course of two decades that became Citigroup, is trying to leave the financial giant, but the board has blocked him, The Wall Street Journal reported Tuesday, citing people familiar with the matter. Weill has spent the past several days trying to get out of his contract in order to launch a private-equity fund, the people say. His contract calls for him to be Citigroup chairman until April 2006.

Hewlett-Packard is expected to announce a restructuring today, and analysts have speculated that the plan includes 20,000 or more layoffs - about one in six of the current jobs. CEO Mark Hurd, who joined the computer and printer giant in late March following the ouster of Carly Fiorina, has said he plans to make significant cost cuts at the company. H-P will provide details of the restructuring plan in a conference call at 8:45 a.m. EDT.

New York state officials and four big chip makers today plan to announce a $580 million research partnership in lithography, a crucial semiconductor manufacturing technology that is facing big changes, the Journal reported Tuesday. The companies - IBM, Advanced Micro Devices, Infineon Technologies and Micron Technology - are expected to each commit $50 million in cash and other contributions over five years to the venture.

On Tuesday, analysts expect Intel to earn 32 cents a share in the second quarter, up from 27 cents a year ago. Ford Motor Co. reports second-quarter earnings before the bell and Wall Street expects 33 cents for the auto giant. Analysts expect Johnson and Johnson to post earnings of 91 cents a share for the second quarter.

Analysts see earnings of 4 cents a share from telecom gear concern Lucent Technologies in its fiscal third quarter. Merrill Lynch reports second-quarter earnings, which will line up against the Street expectation of $1.08 a share. The mean analyst estimate for Boston Scientific Corp.'s second-quarter earnings is 48 cents a share.

Analysts expect Internet company Yahoo to earn 13 cents a share in the second quarter, up from 8 cents a share a year earlier. Drug maker Mylan Laboratories is due to report fiscal first-quarter results before the bell and analysts expect earnings of 20 cents a share.

The Commerce Department is due to release the June housing start report at 8:30 a.m. EDT Tuesday. Economists expect a 2.0 percent increase to an annual rate of 2,050,000 for housing starts in June, while building permits are expected to increase by 1.8 percent to an annual rate of 2,100,000.

On Monday, stocks ended their winning streak as Citigroup delivered the second-quarter earning season's first major disappointment, compounded by some softness seen in Bank of America's results.

The Dow Jones Industrial Average dropped 65.84, or 0.62 percent, to 10574.99. The Nasdaq Composite Index lost 11.91, or 0.55 percent, to 2144.87, breaking a string of seven straight gains. The Standard & Poor's 500 Index shed 6.79, or 0.55 percent, to 1221.13, also snapping a seven-session run.

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