In This Issue Quarterly Earnings Hysteria … Keep Calm and ...

TM

August 2019

Volume VIII Issue 8



Quarterly Earnings Hysteria ¡­ Keep Calm

and Collect Dividends

In This Issue

DI Tables

Portfolio Alerts This Month

Portfolio Holdings

Performance of DI Portfolio

Recent Earnings Announcements

Dividend Payments

Dividend Analysis

2

3

4

5

6

7

In-Depth Stock Reports

Cracker Barrel (CBRL)

8

Casual dining operator is well

positioned to continue its dividend

increases.

Huntington Bancshares Inc. (HBAN) 10

Regional bank raised its dividend

and continues to expect growth

despite interest rate cuts.

IBM Corp. (IBM)

12

Polaris Industries Inc. (PII)

14

Big Blue continues to offer aboveaverage dividend yield while growing

its cloud and security businesses

organically and through acquisitions.

Innovative powersports company

deftly managing through tariff

challenges.

DI Article

Considerations for a Personal

Benchmark

The choice of benchmark often

depends on the asset classes you

are looking to compare and the

investment itself.

16

Next Publication Date:

September 6, 2019

U.S. stocks continued their summer rally in July, driven in part by investors¡¯

expectations of an interest rate cut at the end of July. Expectations were met

with the Federal Open Market Committee (FOMC) lowering rates by 0.25% on

July 31. Low inflation, slowing global growth and the potential negative impact

of trade wars were factors in the decision to cut rates for the first time since

2008. There were encouraging developments in the ongoing trade war between

the U.S. and China as the first face-to-face trade talks since an agreement last

month to hold off indefinitely on any new tariffs took place in Shanghai, China.

On Friday, July 26, the S&P 500 index and the Nasdaq composite both reached

record closes, with the S&P 500 closing near 3,025 and the Nasdaq closing just

over 8,330.

Nearly half of all S&P 500 companies have now posted second-quarter earnings, 76.1% of which have beaten bottom-line analyst estimates, according to

Refinitiv data. However, the start of the corporate earnings season has shown

signs that there may be some cause for alarm in the second half of 2019, as

some executives are voicing concerns about their growth prospects in the face of

an uncertain global economic environment and the ongoing trade dispute with

China. As the earnings season progresses, we should gain a clearer picture of the

real impact of trade and tariffs on corporate earnings and on the future outlook.

As of the close on Tuesday, July 30, the Dividend Investing (DI) tracking portfolio gained 3.3% for the month of July and is up 21.4% for the year.

Through Tuesday¡¯s close, the Dow Jones U.S. Index ETF (IYY), increased 2.6%

for the month and is now up 21.5% since the start of the year.

The DI tracking portfolio¡¯s monthly gain of 3.3% was composed of 3.2% price

appreciation and 0.1% in income return. The Dow Jones U.S. Index ETF¡¯s increase

during the month of 2.6% comprised a 2.6% price rise and no distributed income

return.

Over the life of the DI portfolio, it has provided a total return of 141.9%, with

dividend income contributing 49.2% to the total return. The Dow Jones U.S.

Index ETF has a total return of 169.1% over the same period, with income contributing 34.6% to the total return.

The average dividend yield of the stocks in the DI portfolio is 3.0%, unchanged

from the previous month. The Dow Jones U.S. Index fund has a dividend yield of

1.8%, also unchanged from the previous month.

Portfolio Alerts

There are no portfolio additions or deletions for the DI portfolio this month.

What to Look for During Earnings Season

AAII Dividend Investing is produced by AAII. ¡°The American

Association of Individual Investors is an independent nonprofit

corporation formed in 1978 for the purpose of assisting

individuals in becoming effective managers of their own assets

through programs of education, information and research.¡±

During earnings season, it is easy to get caught up in the headlines and not

pay attention to the underlying fundamentals and figures. The July 26, 2019, DI

weekly email discussed:

1. looking at year-over-year revenue, earnings per share (EPS) and net income

Portfolio Alerts This Month

August Portfolio Deletions

Company (Ticker)

no portfolio deletions for August

Portfolio Deletion Alert

Date

Price

Portfolio

Addition

Alert Date

Stock Total

Return Since

Purchase

August Portfolio Additions

Company (Ticker)

no portfolio additions for August

Latest Price

growth rates;

2. comparing earnings to expectations;

3. examining margins;

4. calculating free cash flow; and

5. checking industry-specific factors.

In addition, investors should consider

some of the following when looking at

earnings announcements. This list is not

exhaustive and is merely an overview of

what you might analyze.

Organic Growth Versus Total Growth

Companies may also distinguish

between organic growth and overall

growth when reporting quarterly results. Organic growth usually doesn¡¯t include profit or growth from recent takeovers, acquisitions or mergers. Organic

growth may also exclude growth (or decline) attributable to foreign exchange.

Organic growth is important because it

shows how sustainable the company¡¯s

core business model is, but it¡¯s also a

subjective measure (management can

determine what is considered organic

growth). If a company¡¯s growth is completely reliant on acquisitions rather

than current operations, it may not be a

sustainable business model. However, a

combination of both organic and expansion growth can be ideal if it diversifies

a company¡¯s revenue base and offsets

relying solely on current operations to

grow market share.

Dividend

Yield

Sector: Industry

For example, DI holding Polaris

Industries Inc. (PII) reported that second-quarter 2019 revenue grew 18.7%,

from $1.5 billion to $1.78 billion compared to the prior year. This 18.7% total

was further broken down into 7% from

organic revenue growth, 12% from acquisitions with the majority driven from

its recent purchase of Boat Holdings LLC

and an approximate 1% decline due to

unfavorable foreign exchange. The Boat

Holdings acquisition added $182.4 million to second-quarter 2019 revenue. In

addition to solid organic growth, Polaris

has also very actively been growing

its business through acquisition. Since

2015, Polaris has acquired seven companies, and as a result greatly expanded

its product and service offerings and

extended its geographical reach.

Some argue that even if a company

is growing only through acquisitions,

it shows that management realizes its

business model needs to adapt and

change in order to succeed¡ªprovided

the company does not overpay for its

acquisitions. This can be true; however,

a sudden increase in company size can

present significant management challenges. People and branding issues may

arise as well.

A skillfully executed growth strategy¡ª

whether through acquisitions, organic

growth or both¡ªcan open the door to

Published monthly by the American

Association of Individual Investors

625 N. Michigan Ave., Chicago, IL 60611

312-280-0170, .

Annual DI subscription, $199.

AAII Dividend Investing? (DI) is not a registered investment

adviser or a broker/dealer. This report is issued solely for

informational purposes and should not be construed as an

offer to sell or the solicitation of an offer to buy securities.

The opinions and analyses included herein are based on sources believed to be reliable

and written in good faith, but no representation or warranty, expressed or implied, is

made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our

information providers shall be liable for any errors or inaccuracies, regardless of cause,

2

Index Total

Return Since

Purchase

increased opportunity.

The key is understanding

where the company¡¯s

growth is coming from

and how that will impact

the future.

Segment Strength or

Weakness

Some companies, but

not all, provide segment-by-segment details on their performance. One of the

keys to understanding the main profitability drivers of a business is understanding how each segment drives or

hurts profitability. Segment information

is available in a company¡¯s 10-K (annual

report).

Some questions to ask are:

? How much does the segment

contribute to the company¡¯s total

revenue and earnings?

? What does the segment make or

sell?

? Are there key suppliers for the segment and is the segment dependent

on input costs?

? What drives this segment¡¯s

profitability?

? What countries or regions does

the segment serve? What percentage of the segment¡¯s revenue and

earnings come from these different

geographies?

? Are there specific countries

or regions that are growing or

weakening?

? Who are the segment¡¯s key

competitors?

? Does the company provide any

market share information? Is market

share increasing?

A company may, but is not required

to, offer specific outlooks for their

different segments. It¡¯s also important

or the lack of timeliness of, or any delay or interruptions in, the transmission thereof

to the users. All information contained in this report should be independently verified

with the companies mentioned.

? American Association of Individual Investors, 2019. AAII Dividend Investing is a

trademark and service mark of the American Association of Individual Investors¡ªAll

rights reserved. This publication may not be reproduced in whole or in part by any

means without prior written consent.

¡°The American Association of Individual Investors is an independent nonprofit corporation

formed in 1978 for the purpose of assisting individuals in becoming effective managers

of their own assets through programs of education, information and research.¡±

Printed in the U.S.A.

August 2019

AAII Dividend Investing

Portfolio Holdings

Ticker

AMGN

BLK

CMA

CBRL

CMI

EMN

ETN

HD

HBAN

IBM

IP

MDT

OXY

PEP

PII

PFG

PG

SNA

TXN

TSN

UNP

WBA

WEC

WSM

Company

Amgen, Inc.

BlackRock, Inc.

Comerica Inc.

Cracker Barrel

Cummins Inc.

Eastman Chemical Co.

Eaton Corporation

Home Depot Inc.

Huntington Bancshares

IBM Corp.

International Paper Co.

Medtronic PLC

Occidental Petroleum

PepsiCo, Inc.

Polaris Industries Inc.

Principal Financial Group

Procter & Gamble Co.

Snap-on Incorporated

Texas Instruments

Tyson Foods, Inc.

Union Pacific Corp.

Walgreens Boots Alliance

WEC Energy Group

Williams-Sonoma, Inc.

Data as of 7/30/2019.

Portfolio Alert

Date

Price

10/27/17 $175.28

10/5/18 $470.86

12/7/18 $74.03

2/3/17 $158.50

10/3/14 $135.10

2/6/15 $73.20

12/31/11 $43.53

9/1/17 $150.78

1/12/18 $15.85

10/2/15 $144.58

4/4/14 $45.81

1/6/17 $72.87

1/9/15 $77.54

12/31/11 $66.35

12/9/16 $85.84

12/9/16 $60.30

12/7/12 $70.29

9/7/18 $180.60

4/5/13 $34.20

3/8/19 $62.78

7/2/15 $96.66

6/7/19 $51.97

12/31/11 $34.96

6/3/16 $53.25

Latest

Jul

Price

Gain/

(7/30/19) (Loss)

$176.45 (4.2%)

$478.41 1.9%

$73.23 0.8%

$175.15 2.6%

$165.17 (3.6%)

$76.71 (1.4%)

$83.12 (0.2%)

$217.36 4.5%

$14.44 4.5%

$149.77 8.6%

$45.06 4.0%

$103.75 6.5%

$52.47 4.4%

$130.48 (0.5%)

$94.75 3.9%

$59.43 2.6%

$120.41 9.8%

$155.81 (5.9%)

$128.54 12.0%

$81.33 0.7%

$179.30 6.0%

$55.40 1.3%

$86.66 3.9%

$67.33 3.6%

Total Return

Since Purchase

Stock

Index

6.3%

23.7%

5.6%

6.1%

2.8%

14.2%

37.9%

37.8%

39.3%

65.8%

15.3%

57.7%

133.9% 153.7%

48.2%

26.1%

(3.8%) 11.2%

16.6%

60.1%

19.7%

76.8%

46.9%

37.8%

(15.6%) 59.6%

143.9% 153.7%

16.6%

37.8%

8.8%

37.8%

127.5% 135.7%

(13.5%)

5.4%

336.0% 113.3%

26.2%

8.1%

102.2%

54.5%

5.9%

5.0%

255.7% 153.7%

66.7%

50.4%

Div

Yield

3.3%

2.8%

3.7%

3.0%

3.2%

3.2%

3.4%

2.5%

4.2%

4.3%

4.4%

2.1%

6.0%

2.9%

2.6%

3.7%

2.5%

2.4%

2.4%

1.8%

2.2%

3.3%

2.7%

2.9%

Industry

Pharmaceuticals

Investment Mgmt & Fund Operator

Banks

Restaurants & Bars

Auto, Truck & Motorcycle Parts

Chemicals - Commodity

Electrical Components & Equip

Retail-Home Improve Prods & Servs

Banks

IT Services & Consulting

Paper Packaging

Medical Equip, Supplies & Distrib

Oil & Gas - Explore & Production

Non-Alcoholic Beverages

Recreational Products

Insurance - Life & Health

Personal Products

Industrial Machinery & Equip

Semiconductors

Food Processing

Freight & Logistics - Ground

Retailers - Drug

Utilities - Electric

Retailers - Home Furnishings

Sources: AAII Stock Investor Pro, Thomson Reuters, I/B/E/S and company releases.

to consider proportionate size of segments when looking at growth figures.

If a segment¡¯s sales grew 100% but the

segment represents only 5% of total

company sales, its impact is less significant than a 20% decrease in sales for

a segment that comprises 60% of total

sales.

Additionally, if there is a problem spot

for a company over several quarters or

even years, investors may wonder why

management isn¡¯t working to restructure or divest that business segment.

Not every segment can be growing all

the time of course, but if a segment

stifles growth or has no expectation of

improving, management may have to

make moves to remain competitive.

DI holding IBM Corp. (IBM) can be

used to illustrate this example, as the

company¡¯s global offerings span a range

of services, software and hardware.

IBM has struggled to stay relevant in

the rapidly changing technology market.

Its legacy business (mainframe and

middleware) continues to decline, while

the company¡¯s focus on newer, highergrowth initiatives or ¡°strategic imperatives¡± such as cloud, social, mobile,

analytics and security businesses have

August 2019

DI Purchase

Price

$174.93

$463.47

$73.13

$158.80

$136.18

$74.67

$45.52

$152.88

$15.86

$149.54

$45.69

$75.05

$75.96

$66.66

$86.34

$59.55

$70.89

$183.36

$34.80

$64.74

$97.23

$52.32

$34.68

$54.00

been slower to ramp up than anticipated. However, the good news is that

the company is starting to overcome

the long decline with its more servicefocused business model.

IBM¡¯s second-quarter 2019 revenue

from its four major segments declined

4.2% year over year. Its largest segment¡ª

global technology services at $6.8

billion, or 35.7% of revenue¡ªdeclined

6.7% from the prior year but gross profit

margin increased 120 basis points. The

second-largest segment¡ªcloud & cognitive software (includes cloud and data

platforms and cognitive applications)

at $5.6 billion, or 29.5% of revenue¡ª

increased 3.2% over the same period

with strong gross margins of 77%. The

third-largest segment¡ªglobal business

services (includes consulting, application management and global process

services) at $4.2 billion, or 21.7% of

revenue¡ªrose 0.5% year over year. The

fourth-largest segment¡ªsystems (includes hardware and operating systems

software) at $1.8 billion, or 9.1% of

revenue¡ªplummeted 19.5% from the

prior year.

For the ¡°new¡± IBM to succeed, investors will need to see the ¡°strategic

imperatives¡± segments¡ªcloud & cognitive software and global business services¡ªgrow faster to offset the decline of

the ¡°legacy business¡± segments¡ªglobal

technology services and systems.

Adjusted Earnings Versus GAAP Earnings

Most companies usually provide

two earnings figures: one is reported

earnings, or earnings compliant with

generally accepted accounting principles

(GAAP), and the other is ¡°adjusted¡±

earnings. The Financial Accounting

Standards Board (FASB) uses GAAP as

the foundation for its comprehensive

set of approved accounting methods

and practices. Adjusted earnings exclude

¡°extraordinary¡± one-time events, such

as restructuring charges, write-downs or

one-time tax charges. Some corporate

executives believe that adjusted figures

provide a more accurate measurement

of the company¡¯s financial performance.

The Wall Street consensus estimate is

based on adjusted earnings, but there

can be differences between what companies exclude and what analysts think

should be excluded.

There are different schools of thought

on whether to look at GAAP earnings

3

Performance of DI Portfolio

$250,000

Growth of $100,000

$240,000

$230,000

$220,000

$210,000

$200,000

$190,000

$180,000

$170,000

$160,000

$150,000

$140,000

$130,000

AAII Dividend Investing Portfolio

$120,000

$110,000

$100,000

2012

2013

2014

2015

2016

2017

2018

2019

$90,000

Performance

Dividend Yield

Dividend Investing Portfolio

3.0%

Dividend Investing Portfolio*

Total

Income

Capital

Return

Gain/(Loss)

Return

July

3.3%

0.1%

3.2%

2019 YTD

21.4%

2.1%

19.3%

2018

(11.5%)

2.6%

(14.1%)

2017

22.3%

3.4%

18.9%

2016

18.2%

3.9%

14.3%

2015

(7.7%)

2.9%

(10.6%)

2014

12.2%

3.0%

9.2%

2013

36.5%

3.6%

32.9%

2012*

10.2%

3.5%

6.7%

From Inception

141.9%

49.2%

92.7%

Performance as of 7/30/2019.

Dow Jones U.S. Index (IYY)

1.8%

Dow Jones U.S. Index (IYY)

Total

Income

Capital

Return

Gain/(Loss)

Return

2.6%

0.0%

2.6%

21.5%

1.1%

20.4%

(5.2%)

1.7%

(6.9%)

21.3%

2.0%

19.3%

12.0%

2.1%

9.9%

0.4%

1.9%

(1.5%)

12.9%

2.0%

10.9%

32.6%

2.3%

30.3%

14.4%

2.3%

12.1%

169.1%

34.6%

134.5%

*The AAII Dividend Investing portfolio started on January 3, 2012. The portfolio is run as if

managed by a subscriber and includes delays in reaction time to portfolio alerts, actual

commissions and bid-ask spreads.

or adjusted earnings when analyzing

a stock. Some analysts and investors

believe that adjusted earnings provide

a clearer picture of a company¡¯s current

and projected operations, while others believe that adjusted earnings are

harmful to the market¡¯s perception and

should be more heavily regulated. The

difficulty is that CEOs and CFOs have

4

some discretion over what gets included

in and excluded from adjusted earnings. By design, GAAP earnings provide

a more complete picture of historical

performance, but can be more volatile

because they include write-downs, onetime charges, currency adjustments, etc.

Looking at year-over-year GAAP earnings may provide a distorted picture: For

example, if the second quarter of last

year included a one-time gain from a

sale of an asset and this year¡¯s comparable quarter doesn¡¯t include a similar

gain, year-over-year earnings will show

a decline.

For example, DI holding Eastman

Chemical Co. (EMN) reported secondquarter 2019 GAAP earnings per share

of $1.85 and adjusted earnings per

share of $1.99. Adjusted earnings

exclude $0.09 per share of net restructuring charges and $0.05 of net adjustments due to recently enacted U.S. tax

law changes.

The key is to look at the line items

that were included or excluded to

get from GAAP earnings to adjusted

earnings (a bridge between the two is

usually provided in the footnotes). Are

these really one-time events?

Management¡¯s Guidance and

Comments

When a company announces quarterly earnings, typically management

provides comments in the press release

about the headwinds or tailwinds the

company is facing and offers revenue

and earnings guidance for the future.

Reading or listening to the actual conference call transcript can also provide

information about the company¡¯s

quarterly performance and expectations

for the future (transcripts are available on Seeking Alpha: Go to https://

, type the ticker in the

upper-left-hand corner, select the ¡°earnings¡± tab, then select the ¡°transcripts¡±

subtab). Any guidance that management issues should be compared to

consensus estimates as well as any

previously issued guidance from the

company.

For example, commenting on the

outlook for full-year 2019, Eastman

Chemical board chair and CEO Mark

Costa said, ¡°We continue to operate in

a difficult global business environment

due to the impact of the U.S.-China

trade dispute and other factors ¡­ We

no longer expect underlying macroeconomic conditions to improve in the

second half of the year ¡­ We expect

2019 adjusted earnings per share to be

August 2019

AAII Dividend Investing

between $7.50 and $8.00.¡± The original

2019 guidance anticipated adjusted

earnings per share growth to be between 6% and 10% from 2018, or $8.69

and $9.02, respectively.

Investors should also look at management¡¯s guidance or changes in regard to

cash flow, dividends and buybacks. For

example, during its second-quarter 2019

earnings call, DI holding Huntington

Bancshares Inc. (HBAN) announced that

the board approved the repurchase of

up to $513 million of common shares

over the next four quarters.

Dividend News

Sixteen stocks in the DI portfolio

declared dividends during July thus far,

and six of those declarations represented an increase over the prior

quarter¡¯s payment: Cummins Inc. (CMI),

15%; Huntington Bancshares, 7.1%;

Occidental Petroleum (OXY), 1.3%;

Principal Financial Group (PFG), 1.9%;

Union Pacific Corp. (UNP), 10.2%; and

Walgreens Boots Alliance (WBA), 4%.

Union Pacific¡¯s 10.2% dividend increase, to $0.97 per share, marks Union

Pacific¡¯s fifth dividend increase in the

past eight quarters and second increase

in 2019. Since July 2017, Union Pacific

has been raising its dividend about 10%

twice a year.

Eighteen of the 24 stocks in the

portfolio have announced dividend increases this year, and the increases have

averaged 7.7%.

Portfolio News

Strongest Stocks During July

Texas Instruments (TXN) was the topperforming company in the DI portfolio

during July, up 12.0% as of July 30. The

company reported second-quarter 2019

earnings that beat market expectations

and provided positive guidance for

earnings growth for the rest of 2019.

Sentiment for Texas Instruments was

high, despite the company reporting a

second-quarter sales decline of $320

million, or 9%, to $3.67 billion from

last year. Analog revenue declined 6%

and embedded processing declined

16%, while operating profit was $1.51

August 2019

Recent Earnings Announcements

Ticker

BLK

CMA

HBAN

IBM

IP

PEP

PII

PFG

SNA

TXN

UNP

Company

BlackRock, Inc.

Comerica Inc.

Huntington Bancshares

IBM Corp.

International Paper Co.

PepsiCo, Inc.

Polaris Industries Inc.

Principal Financial Group

Snap-on Incorporated

Texas Instruments

Union Pacific Corp.

Date

Reported Expected Surprise

Reported Earnings Earnings

%

Jul 19

$6.410

$6.500

(1.4%)

Jul 17

$1.940

$2.004

(3.2%)

Jul 25

$0.330

$0.320

3.1%

Jul 17

$3.170

$3.069

3.3%

Jul 25

$1.150

$0.995

15.6%

Jul 9

$1.540

$1.499

2.7%

Jul 23

$1.730

$1.647

5.0%

Jul 25

$1.520

$1.402

8.4%

Jul 18

$3.220

$3.208

0.4%

Jul 23

$1.360

$1.219

11.6%

Jul 18

$2.220

$2.142

3.6%

Data as of 7/30/2019.

billion¡ªa 12% decrease from a year

ago. The second-quarter sales decline

came amid ¡°broad-based¡± weakness,

according to a prepared statement from

CEO Rich Templeton. Cash flows from

operations were $1.8 billion and free

cash flows for the trailing 12-month

period were $5.9 billion, up 3% from

a year ago. Earnings per share were

$1.36 which dropped 1% from last year,

but still topped the I/B/E/S consensus

estimate of $1.22.

Texas Instruments¡¯ third-quarter outlook is for revenue in the range of $3.65

billion to $3.95 billion, and earnings per

share between $1.31 and $1.53. The

company¡¯s earnings growth guidance

signals that a slump in orders for electronic components may end soon.

Procter & Gamble Co. (PG) was the

DI tracking portfolio¡¯s second-strongest

performer for the month through July

30, gaining 9.8%. Adjusted earnings per

share rose 17%, to $1.10, during the

fourth quarter of fiscal 2019 from the

same quarter the prior year, above the

I/B/E/S estimate of $1.05 per share.

Revenue grew 4% from a year ago to

$17.09 billion, which also surpassed the

estimate of $16.86 billion. Organic sales

growth was 7% in the quarter, making for the best result in more than a

decade.

For fiscal-year 2020, P&G expects

sales growth to climb 3% to 4% year

over year and organic sales to climb at a

similar rate. It is projecting core earnings per share to be up between 4%

and 9%, translating to $4.70 to $4.93

Sources: I/B/E/S and company releases.

per share compared to fiscal-year 2019

core earnings per share of $4.52. The

company plans to spend more than $7.5

billion on dividends in fiscal 2020 and to

repurchase between $6 billion and $8

billion of its stock.

IBM Corp. (IBM) was up 8.6% during

July, making it the third-best-performing

stock in the DI portfolio for the month

as of July 30. The company announced

results for the second quarter of 2019

that surpassed consensus earnings

estimates yet fell short of consensus

revenue expectations.

Adjusted earnings per share for the

quarter were $3.17, beating the I/B/E/S

estimate of $3.08 per share by 2.9%.

Revenues of $19.16 billion declined

4.2% on a year-over-year basis. The revenue decline can primarily be attributed

to currency fluctuations and headwinds

from IBM¡¯s product cycle. On a positive

note, the company¡¯s cloud & cognitive

software segment revenues improved

5.4% year over year to $5.6 billion.

Revenues increased primarily due to

growth in applications driven by security

and solutions, improvement in data

and analytics and growth across hybrid

cloud and data portfolio. Non-GAAP

gross profit margin expanded by 100

basis points year over year to 47.4% for

the quarter, attributed to growth in the

company¡¯s higher-value segments.

In the second quarter, IBM returned

$1.8 billion to shareholders through dividends and share repurchases. However,

the company suspended its share repurchase program on July 9, following the

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