International Business Machines Corporation (NYSE: IBM) is a top provider of information technologies, including computer systems, networking systems and storage devices. It is also one of the largest providers of software and semiconductors and its service arm is the largest in the world. Competitors include Hewlett-Packard (NYSE: HPQ), Microsoft (NASDAQ: MSFT) and Electronic Data Systems (NYSE: EDS).

The company pleased investors late last month, when it authorized $15 billion in additional funds for use in the IBM stock repurchase program. That amount was in addition to about $400 million remaining from a prior authorization. Management said that the anticipated repurchase activity could add five cents per share to FY08 earnings and that led to declaration of FY08 EPS guidance of at least $8.25 ($8.22 consensus).

Stocks are cheap on an earnings basis -- unless they have earnings risk. If they have no earnings risk, they are not cheap.

Therein lies the conundrum on a day like today. Let's say you went CAMPing today: You bought Coke (NYSE: KO) (Cramer's Take), Altria (NYSE: MO) (Cramer's Take), Merck (NYSE: MER) (Cramer's Take) and Procter & Gamble (NYSE: PG) (Cramer's Take). Do you know that even after the precipitous falls last week and the declines we expect today, that none of them is historically cheap? Do you know that most of them are up significantly since last summer?

That's a real issue. You aren't buying them at rock bottom prices because they are up so much already.

Now, let's take the examples of the cyclical stocks in the Dow. They are cheap: United Tech (NYSE: UTX) (Cramer's Take), Honeywell (NYSE: HON) (Cramer's Take), Alcoa (NYSE: AA) (Cramer's Take). But their earnings estimates are considered vulnerable to the worldwide slowdown and a U.S. recession.

You can chicken out, buy some Microsoft (NASDAQ: MSFT) (Cramer's Take), which has good earnings, or IBM (NYSE: IBM) (Cramer's Take), which just had great earnings, and in many ways those will be cheaper.

EMC Corporation (NYSE: EMC) opened at $18.87. So far today the stock has hit a low of $18.53 and a high of $18.88. As of 10:55, EMC is trading at $18.69, up $0.18 (1.0%).

The company announced today that it has extended a licensing agreement with IBM (NYSE: IBM) that will allow IBM to continue using EMC technology in its System z products. Technical indicators for EMC are bullish but deteriorating, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $17 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make a 11.1% return in just 2 months as long as EMC is above $17.00 at September expiration. EMC would have to fall by more than 8% before we would start to lose money.

EMC has been steadily rising over the past year and hasn't been below $17 since early June. The stock has shown support around $18.00 recently. This trade could be risky if EMC has broken its upward trend in the past two weeks, but even if that happens, this stock could find support right around $18 where it bounced off its 50 day moving average.

Brent Archer is an options analyst and writer at Investors Observer.DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in EMC or IBM.

Riddle: How is Jim Cramer like Daniel Boone?

Answer: They are both required to wrestle a bear now and then ...(pronounced, rassle a bar).

I'm going on record right now. It is my opinion that the bear is stalking Wall Street. A big, nasty, ugly, smelly, sluggish old bear is lurking around the corner, and he's going to park his fat, furry butt right on the DJIA. I don't like it any more than you do, but as I've said before, I can't help but see what I see. I see very few bright glossy gadgets slated for release in the electronics/technology sector. I see retail sales flagging. I see hopeless attempts to prop up crude oil prices. I see home sales and construction in a blue funk. I see satellite communications saturated along with their associated markets. I see banks raising their service fees to augment flat-lined profits. I see managerial bloat. I see speculators scurrying to and fro trying to grasp a slice of any 6% or better spike. I see a Democratic Congress damning the consumer by trying to place an increased capital drag on energy producers, (yeah, tax the oil companies ... that'll help the little guy, you idiots). I think it's time to button up and hunker down with some of your hard-earned profits. I think it's time to lock into some value positions that portion of capital that you don't consider to be a gambler's share of your wealth.

Is there a bear market coming? I do most assuredly think so. I select a quote from Jim Cramer: "If you're in the market, you have to know there's going to be declines. And they're going to cap, and every couple of years you're going to get a 10 percent correction ... They're gonna happen. When they're gonna start, no one knows. If you're not ready for that, you shouldn't be in the stock market."

MOST NOTEWORTHY:

• International Business Machines (NYSE: IBM) was upgraded to Buy from Sell at ThinkEquity citing increased performance and profitability in the company's Global Service unit and strong software sales; IBM's target was raised to $110 from $70.

• Volterra Semiconductor (NASDAQ: VLTR) was upgraded to Strong Buy from Buy with a $21 target at First Albany. The firm told clients Volterra's innovative power management technology is driving market penetration in higher volume markets while driving down costs per amp.

I wasn't sure what to make of this study when I read it: Americans don't get emotional support from their banks. It seems that Americans don't feel that banks understand them, nor appreciate their business. I didn't think anyone needed a study to determine that; ever since I can remember, consumers have been complaining about banks.

There's another side to this study that concludes that bank customers can be hostile because of their dissatisfaction. Well, that isn't surprising either. Have any of these researchers ever stood in a bank line, ever needed to perform a transaction that took hours to complete, ever been charged an arm and a leg for a service that seemed routine?

Well, despite its predictability, it seems that International Business Machines Corp. (NYSE:IBM) has decided to study this via its IBM Global Business Services consulting division. While the study found that 52% of the respondents thought their banks' technical abilities were good, only 26% gave that rating when it came to "emotive attributes" such as "values my business" or "employees listen and follow up" or "makes relevant offers."

IBM wanted to see how happy customers are since they assumed that customers would be more wiling to stay with the bank and expand their business if they were happy with it rather than if they were not. But I say that it doesn't really matter since all banks are pretty much the same -- whether it be Bank of America (NYSE: BAC), Wachovia Corp (NYSE: WB), Citigroup or JP Morgan Chase & Co. (NYSE: JPM). I would expect to get the same "non-appreciative" service in all banks. The hassle of opening up more accounts in other banks or moving them around would usually make me stick with my long-time bank despite my issues with my bank. And of course, the study supports that too, with only 24% considered "advocates," while 39% are "apathetic" and 37% "antagonistic."

For some reason, it seems IBM was surprised by these last results and the lesson for banks the consulting service would recommend is to re-evaluate customer satisfaction and what brings it about.

I wonder whether IBM's recent foray into the banking industry in China along with Citigroup, Inc. (NYSE:C) has anything to do with IBM's decision to study the matter. I hope that China's Guangdong Development Bank's customers would be more satisfied than their American counterparts (should IBM and Citigroup win the bid of course).

Lenovo is not doing so well outside China. But inside the world's second largest PC market, it has a full one-third of the market share.

Across all of Asia, excluding Japan, Lenovo now has a 21% share. Hewlett-Packard Company (NYSE:HPQ) trails with under 13% and Dell, Inc. (NASDAQ:DELL) has only 9%.

As the growth rate for PCs in the U.S. slows, the big American-based PC makers have to look at the fastest growing markets to make up the slack. But if Lenovo has anything to say about it, that may be hard.

Lenovo is trying to expand into the U.S. and has not had significant success even though it owns the former IBM PC business and has access to use that brand.

With a tough sell for all PCs in the U.S., Lenovo may be better off defending its lead in Asia and letting the U.S. companies bleed one another in their home market.

Douglas McIntyre is a partner at 24/7 Wall St.

MOST NOTEWORTHY: Energy Partners (EVEP) and HB Fuller (FUL) led a moderate initiation list Monday as the Dow and Nasdaq moved higher in early trading.

• AG Edwards initiated EV Energy Partners (NASDAQ:EVEP) a Buy and a $22 target, as the firm likes the company's experienced management team, debt-free balance sheet, and low-risk development opportunities.
• Keybanc initiated H.B. Fuller Co. (NYSE:FUL) with a Buy and $28 target, citing low manufacturing cost, portfolio mix and pricing power.
• CE Unterberg initiated Shanda Interactive Entertainment Ltd. (NASDAQ:SNDA) with a Buy and $21 target, as the firm is positive on the company's new revenue model.

OTHER INITIATIONS:

• UBS Investment initiated Ryanair (NASDAQ:RYAAY) with a Buy and a $60.41 target.
• Finally, SG Cowen initiated International Business Machines Corp. (NYSE:IBM) with a Neutral, citing valuation and a lack of traction in its services unit for the rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

International Business Machines Corp. (NYSE:IBM) is setting up development centers in India and China. Its global procurement center has already been relocated to China.

The two new centers will help IBM build its service-oriented architecture (SOA), an architecture that can help businesses find information stored in different formats faster.

The India facility will focus on solutions for healthcare. The China-based operation will work on government and bank solutions.

What happened to locating these jobs in the U.S.? IBM now has 43,000 employees in India and the number is likely to grow. So while IBM keeps it headquarters in the U.S., there seems to be a dearth of announcements about adding facilities here.

IBM has benefited from its new service-oriented strategy. On the basis of a strong financial performance in Q3, the company's stock has gone from $74 in July to the current $92, right at its 52-week high.

Let's hope that IBM's U.S.-based employees made a lot of money on their stock options. They may need it for early retirement.

Douglas McIntyre is a partner at 24/7 Wall St.