NEW YORK (TheStreet) -- Shares of International Business Machines (IBM - Get Report) were nearly flat in late trading Monday after reporting earnings. It would have been more impressive if the company had been able to increase revenue year over year, Guy Adami, managing director of stockmonster.com, said on CNBC's "Fast Money."
The company posted its 12th consecutive quarter of revenue declines, Adami added. The stock still trades with too high of a valuation considering its poor sales.
Steve Grasso, director of institutional sales at Stuart Frankel, remains bearish on the stock over the long term. However, he did point out the stock seems to have support near current levels. He thinks it will be hard for management to right the IBM ship. Its cloud business likely won't be the answer because it's a commoditized product, meaning margins are likely to come under pressure in the future.
While it's true cloud margins will likely decline, margins for this quarter were one of the company's bright spots, said Pete Najarian, co-founder of optionmonster.com and trademonster.com. Management needs to provide investors with a long-term plan on how IBM will succeed.
As sales and net income fall, IBM's share repurchases are also declining, said Dan Nathan, co-founder and editor of riskreversal.com. Cloud makes up just 5% of sales, so it's not going to move the needle, he added. Nathan said it looks like there's support in the stock, while investors in other large cap tech names seem to have priced in the impact of the stronger dollar.
Chinese equities didn't bounce on Monday, despite what should have been perceived as "very bullish news," according to Dennis Gartman, editor and publisher of The Gartman Letter. The People's Bank of China lowered the required reserve ratio to 18.5%, from 19.5%, which is intended to boost borrowing by freeing up $200 billion for banks to lend.
When the market reacts bearishly to bullish news, it's a bad sign, Gartman reasoned. Investors should avoid Chinese equities at this point, but he didn't suggest selling them short either.
Broadly speaking, Najarian isn't buying Chinese stocks. However, he likes select technology companies and specifically says investors can be long China Mobile (CHL.
Gartman is "spot on," according to Nathan, who agreed that investors should avoid Chinese equities, but shouldn't necessarily short-sell them either. He likes Baidu (BIDU - Get Report) if it can stay above $200.
Lions Gate Entertainment (LGF Vice Chairman Michael Burns didn't think it was strange timing for Mark Rachesky, the company's largest shareholder via his MHR Fund Management and chairman of Lions Gate, to sell 10 million shares.
Rachesky only sold 20% of his holdings and has been a shareholder for more than 10 years. Despite selling amid possible interest from outside companies, Burns backed Rachesky, saying he was looking out for investors' best interest.
Turning to the business, Burns says investors need to remember that Lions Gate is quite diversified and only derives roughly 20% of its business from movies. Management and many of its large investors remain focused on the long term, he said.
The stock has a low valuation and big short interest, which should be attractive for long-term investors, Adami said. For traders, they should wait for the stock to climb back above $32 before getting long.
For their final trades, Grasso is buying Potash (POT and Najarian is a buyer of Under Armour (UA - Get Report). Nathan said to buy Macy's (M - Get Report) and Adami is buying Facebook (FB - Get Report).