Is IBM Poised to Head Higher?

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With shares of International Business Machines (NYSE:IBM) trading around $187, is IBM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

IBM is an information technology company. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. Technology products and services are in high demand worldwide, as consumers want to be up to speed and companies always need the latest and greatest to stay ahead of the competition. Cloud computing has been hot in recent times, which has not been good news for IBM. Should the company want to hold on to its market share, it needs to make moves quickly and provide the technology products and services that worldwide consumers and companies demand.

Hundreds of workers at a plant run by IBM have gone on strike, as the company prepares to transfer the southern China factory to Lenovo Group Ltd. under a $2.3 billion deal for IBM’s low-end server business. Images and video recordings of the strike have spread over social media since Monday and show large numbers of workers in blue coats holding signs and shouting from outside the gates of the IBM Systems Technology Co. Ltd. plant in the city of Shenzhen. The strike entered its fourth day on Thursday.

A spokesperson for IBM confirmed the strike, but declined to offer an explanation of why workers walked out. In a statement, IBM spokesperson Harriet Ip said employees have a choice of remaining at the plant after Lenovo takes over under wages comparable to what they have been receiving or they can leave and receive an “equitable severance package … While it is entirely an individual’s choice, we are hoping employees will decide to remain with ISTC,” Ms. Ip said. According to posts on Sina Corp.’s Weibo social media service, which couldn’t be independently confirmed, people who identified themselves as plant workers said IBM wasn’t offering sufficient severance for those who opt to leave, while those who want to stay worry wages will fall. ”We are protecting our rights,” one Weibo user, who declined to be identified but said he was a worker at the plant, said via online chat.

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