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International Business Machines Corporation Message Board

  • johns.patrick johns.patrick Dec 7, 2011 7:33 PM Flag

    blackcomb, need to call you out

    not sure what you are doing lying or just a very weak investor:

    1) A company that pumps 14 BILLION dollars a year into buyback and dividends will not accumulate book value. You endless repeating of the book value to price ratio is not a metric by which to judge this stock

    2) Your comments about free cash flow per share are inaccurate, the companies free cash flow, proforma for on-going biz is $16 Billion or 13.33 per share. Please review the companies 3rd qtr presentation and acknowledge that you understand this

    3) If you are a Warren Buffet want to be, then instead of thinking you understand his investing methodology because you read a book. Pretty sure his analysis is more complex than what you can gleen from a book - he bought in because he sees the value of a company that just completed a 5 year plan, that was hugely successful and they have another ambitious 5 years plan that is not fully priced into this stock

    4) Your latest comment about analyst buy ratings, do you understand we are on a Yahoo board? The analyst opinions are right in the quote info section. Macquaire initiated with an outperform, Collins stewart initiated with a buy, Cannaccord upgrade to buy all of these were post $101 price levels. There are 7 buys, 7 strong buys and 14 holds on this stock -0- underperforms and sells. This is in fact good news as we still have the opportunity for 14 analysts to finally get it right and upgrade to buy from hold - most of those holds missed the 91% bump the rest of has have enjoyed that have been adding to our IBM position on dips the past 3 years

    If you want a company with mounds of cash go buy Apple, I own it as well but wish to god they would reduce their Book Value by giving that money to the shareholders instead of hoarding it for ?? ego reasons ??

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    • johna.patri...
      Book value is something I know about. I spent six years in the cost accounting Dept of a major corporation. In college I minored in accounting so I thought I knew the basic very well. Until my work experience I thought book value was a meaningful figure. It's based on historical cost, (no relevance to current cost). It's a result of depreciation. (based on the best write off available under IRS rules and not relevant to reality) There is no accommodation for obsolescence (corporation often continue to use equipment that has become obsolete because it's a cheaper alternative) and last in bankruptcy most of the physical assets will bring only pennies on the dollar (the lawyers get most of any value) Bottom line look at return on equity and forget asset value based numbers. WW

      • 2 Replies to wixiewaxy
      • Basic is very basic. Tough love my friend.

      • wixie,

        Understood book value is not an important metric for IBM and I wasn't considering it in my valuation. IBM's value is based on beleiving mgt can execute their biz plan or not - if they execute their biz plan EPS will be $20 by 2015 and the stock will seem very cheap today

        regarding BV be careful, sarbanes oxley has changed what BV is, mark to market means that the companies are supposed to revalue to market price assets annually, not like before when book value was price - depreciation this is fixed assets as well as financial assets. Thank god the gov instituted SOX though right because we'll never have another financial melt down with that in place (Oh wait, they implemented that prior to the melt down - oh well don't worry dodd-frank will solve our problems - course I didn't realize the price credit card companies were charging retailers caused the financial melt down but I guess it must of because the good people of congress would never not have put it in the rules if it wasn't the root cause of the problem right?

    • blackcomb, ZZZZZZ are you conceding that my analysis appears correct?

    • Mr. ZZZZZZ

      you make my point perfectly...

      "I like the 60 billion in cash..."

      They don't have 60B they have 81B in cash and they are probably going to generate another $40-50B this year. Is appl an investment company or a tech stock?

      Believe me if they blow through 60-80B without any profits or growth to show for it the last think you will be worried about is an equity offering

    • >>I own it as well but wish to god they would reduce their Book Value by giving that money to the shareholders instead of hoarding it for ?? ego reasons ??<<

      You do realize that by depleting cash with no equivalent benefit derived to the company, puts the company at risk of having to come back to you with hat in hand, at mush lower share value, should conditions change for the worse.

      I like apple's $60B in cash, it offers longevity, and a non trivial floor to the stock price when the ---- really hits the fan.

    • johns .... on your final comment about cash .... AAPL MSFT
      and the rest all have impressive chests ..

      IBM ?? check it out ... 2 yrs ago their pile was 21+BIL and
      growing .. it has shrunk by 50% !!!! WHY ?? IBM has been spending it .... buying up whatever they can to bulk up ....

      no moss under this company's feet ....

      plus that debt is not there to pay a div , or buy equipment,
      or build something , or operate .. it's an asset ... the
      money that they have loaned other companies to buy
      their goods/services .. revolving credit facility ..

      lol .... IBM is a 12 cylinder engine ... and all are firing
      just fine ... later .. garce

    • and yes is it a bit high right now, of course but I have to much built in gain to take the tax hit everytime this stock outruns itself a little bit

      Stock will be a $260 stock in about 2 years and I'm going to keep collecting those dividends and enjoy the ride

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