Nic Chahine Calls IBM 'A Startup'

Though it remains one of Warren Buffett's largest holdings, International Business Machines Corp. IBM has shown investors little reason for promise. 

Big Blue is down 17% in the last year, and though it spiked briefly Tuesday morning, remains trading around the $130 level, its lowest since 2010. 

Options expert Nic Chahine, took it a step further on Tuesday's edition of PreMarket Prep, calling the traditional tech giant a startup. 

"It's a startup at this point," he said. "I don't know what they do."

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Chahine, author of Create Income With Options Spreads on Marketfywas responding to comments from PreMarket Prep co-host Joel Elconin, who said he's "upgrading IBM to a screaming buy" after seeing their new commercial for the supercomputer Watson. 

In December IBM and Apple announced a partnership to create business-oriented products, but that did nothing to bolster Chahine's confidence. 

RELATED LINK: Apple-IBM Announce Partnership

"I called it down from wherever it was from the day I heard their CEO talk with Apple, and it was all general terms. It could have been any two CEO's talking about any products, it didnt matter. I was like 'These guys have nothing fundamentally.'" 

IBM is expected to report earnings Tuesday afternoon, with Wall Street looking for fourth quarter earnings per share of $4.82 on $22.11 billion in revenue. The last four quarters have seen them miss on the top but beat on the bottom line. 

Chahine thinks the stock has come to a fork in the road. 

"Now it has a decision: either to completely fall below that and start trading at around $110, or bounce a little to $140. But I wouldn't chase it either. It may bounce with the markets, but I don't know anything about it fundamentally that tells me 'Ok, these guys have a future somewhere.'"

You can listen to the rest of PreMarket Prep's interview with Nic Chahine from 35:40-53:00 in the clip below. PreMarket Prep is an interactive daily talk show that features fund managers, Wall Street analysts, and technicians to discuss morning movers and all relevant news related to the markets. Listen and chat with the show's hosts and guests live from 8-9:30 AM ET here, or catch the podcast here.