Market Overview

Nic Chahine Still Considers IBM A Startup

Nic Chahine Still Considers IBM A Startup

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

Big Blue is down 17 percent in the last year, and although it spiked briefly Tuesday morning, it continues 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, long-standing tech giant a "startup."

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

Related Link: Chowdry Sees Major Tech Layoffs Coming

Chahine, author of "Create Income With Options Spreads on Marketfy," was 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.

The Apple And Big Blue

In December, IBM and Apple Inc. (NASDAQ: AAPL) 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 didn't matter. I was like, 'These guys have nothing fundamentally.'"

Earnings Ahead

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 discussing 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 a.m. ET here, or catch the podcast here.

Image Credit: By Mark Ahsmann (Own work) [CC BY-SA 3.0], via Wikimedia Commons


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