International Business Machines Corp. (NYSE:IBM) is in talks with Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) to sell IBM’s System x x86 server. The reported price of this deal falls between $5 billion and $6 billion. Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) recently announced a bond issue, which indicates a strong determination to acquire IBM’s low-end server business. International Business Machines Corp. (NYSE:IBM) decided to sell the x86 server division, as there was a decrease in demand from its clients. Execution of this deal will increase fourth quarter revenue. The cash generated from this deal will be utilized to invest in its high-revenue-generating segments like cloud computing. With the help of this deal, the total revenue is expected to increase from $23.04 billion to $29.61 billion by the fourth quarter of 2013.
Commission and fees contribute in revenue generation
Wells Fargo & Co (NYSE:WFC) is the third-largest retail brokerage firm in the U.S. Its retail brokerage client assets have increased to $1.3 trillion, up by 7% year over year in the first quarter of 2013. Commission and fees related to its brokerage and asset-management business reported $7.7 billion in revenue in the first quarter of 2013. This includes fees generated from its portfolio-management service, transactions executed on client direction, investment-banking activities, advisory, and underwriting services.
With the rising demand of brokerage and advisory services, Berkshire Hathaway Inc. (NYSE:BRK.A) and 3G Capital have hired Wells Fargo in the first quarter as their financial advisor to acquire H.J. Heinz Company (NYSE:HNZ). It is estimated that revenue generated from commissions and fees will increase from $7.7 billion in the first quarter of 2013 to $11 billion in first quarter of 2014.
Wells Fargo & Co (NYSE:WFC) reported free cash flow, or FCF, of $14.81 billion in the year 2012. Now it is planning to utilize FCF to pay higher dividends in June 2013. The company has regularly paid dividends since 2000, maintaining an average yield of 2.91% every quarter. The company will maintain dividend yield of 2.90% for the next quarters, too. It declared a dividend of $0.30 per share for the second quarter of 2013, 20% higher as compared to $0.25 per share in February 2013.
Conclusion
By adding stevia to carbonated drinks, Coca-Cola is sure that more customers will be attracted and that this will lead to an increase in sales volume of carbonated drinks. The new bottling business will start generating revenue by the end of 2013.
By acquiring SoftLayer Technologies, IBM will be able to expand its cloud computing business. And by selling its x86 server to Lenovo Group Limited (ADR) (OTCMKTS:LNVGY), it will be able to focus more on revenue-generating segments. This will help IBM generate high revenue by the end of 2013.
Wells Fargo will make huge profit from its growing advising and from financing big companies. The company is paying dividends on a continuous basis to provide good returns to its investors.
I recommend buying all three stocks.
Shweta Dubey has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Wells Fargo. The Motley Fool owns shares of International Business Machines. and Wells Fargo. Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Berkshire Hathaway’s Top 3 Holdings: Are They Worth Investing In? originally appeared on Fool.com is written by Shweta Dubey.
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