The largest shareholder of IBM is being decimated today. $800 million is a 'lot of money' and with decreasing revenues for the past 16 QUARTERS it doesn't look too promising for the future.
I think you better check out AA. This stock is on a tear. It will be a 'new' company in a few months with their split. Don't compare your LOSER with AA which will be a WINNER and has been for a few months now.
BTW, what's next? I think price will soon go up, and someone will point out IBM's earning is great and turning around from here. We are played as stupid herd of sheeps. Will see.
IMO, today price movement was a total "setup". Although the expected earning (top & bottom) were surpassed, market penalized IBM stock b/c the revenue was lowered than that last year and the lowest in 14 years. Well, wasn't it already "expected" in the estimate? Why bought all the way up to be "upset" about after earning? That's why I said this is the total setup on IBM earning. In other words, market was already determined to sell regardless what'd be coming out of earning.
Disclaimer: I had a Put on this and made a gain, so I'm not complaining or bashing anything. I'm just pointing it out. The whole "logic" behind price is non-logical at all to me. And I'm not naive about the market, but I still hate to see such a huge manipulation and how media presents the news as something really new while it's not.
What are the current terms, including exercise prices, for incentive stock options? Do you favor restricted stock or options be offered? Why?
I would set options with exercise prices reflecting targeted internal market value of IBM stock when each contract expires. Executives should be given incentives which are forward looking, and not at current valuations. Executives who make the decisions which businesses to sell or buy should be given targets which measure loss minimization or ROCA for those being purchased and be paid (increases or decreases) in compensation relative to those metrics.
Why is IBM not selling its traditional mainframe business or other non-strategic businesses? I am relieved it is reducing headcount in them. I hope those laid off employees were given opportunities to work and retrain in strategic areas. I am dishearten that IBM is sourcing most of the strategic H/C overseas. Is that necessary to remain competitive? I wish executives would be given pay cuts or not offered stock incentives when revenue continues to decline. Giving bonuses for earnings which increase because of tax considerations, one time events, or stock buybacks is wrong.
Why is Bershire up given its position in IBM, even with its other holdings? Maybe people are taking tax losses in IBM by swapping into BRK to avoid a future wash and still not second guess and up movement in IBM in the interim. I suspect BRK already has a full position in IBM. If you do not do tax loss selling, I would continue to hold IBM.
Warren was right a long time ago when he said he does not understand IBM's business. That is an excellent learning for all investors. Don't invest in what you don't know. He bought into it based on the excellent sales jobs IBM execs do. The reality is, the new IBM will be totally different than the old. Much of their business (including new ones like cloud) are quickly becoming commodity products. System X - became an unprofitable commodity. Power Systems - becoming a commodity business. They are betting on Cloud - cloud is already a huge commodity business and margins will constantly be pressured - especially with the big boys already playing in that market. Watson - IBM's problem has always been how do you turn these great ideas into products that people want to buy for large margins. IBM has developed some of the coolest technology over the last 10-20 years. But the difference now is, the buyers of this cool technology don't want to pay anywhere near the price that is required to return a profit on it. Blue Gene is a perfect example. IBM could never turn a profit on it because no-one wanted to pay for it. Everyone was like - that is so cool, but I'll pass or I'll pay half price. Some people need system Z so they will continue to buy it and that is where the high margins will remain. But big business like Power - customers are saying - look I can go over here and buy the same stuff for half price. Is it the same quality- no but I no longer need high quality in that space. I need the Kia. I don't need the Mercedes. Intel once again is ahead on this curve. They were way out in front on moving to cheaper,
That's what he's been doing since $215 per share! He is now down almost $750 MILLION
to day on this stock alone. He's the largest investor (mutual funds included) in the stock. This has been a disaster much like AXP.
what a laugh .. it's so obvious that IBM continues to use financial engineering in lieu of
actual business ...
how many headlines did you see that said "IBM beats revs and earnings " ? yesterday ,
the stock shot up over 2 bucks on those headlines , then tanked viciously once the
pros had a chance to read the text , then the follow through this morning ...
only took an hour for vol to exceed the avg ... i'd say that over 20 mil shares will
trade and the price could dip below 140 ... g