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International Business Machines Corporation Message Board

  • mr_dinky_dot_bomb mr_dinky_dot_bomb Apr 5, 2013 10:06 AM Flag

    Added a Little

    It's a conflicting urge to add when your existing stake takes a hit.

    Still have a little more dry powder for IBM because it's been good for me so far.

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    • I believe IBM will fill the gap at $196 where it will be a screaming buy, and the last chance to buy it under $200! IBM will raise their dividend at the end of this month which should give the stock a boost. The earnings report could provide an opportunity to buy at a lower price? For those looking to get in at a more attractive entry level they may have an opportunity in a few weeks?

      • 1 Reply to qofaslave69
      • "I believe IBM will fill the gap at $196 where it will be a screaming buy, and the last chance to buy it under $200!"

        That may happen. IBM doesn't return to fill all gaps though. Goldman put a sell on IBM about 10 days before the Q2 2009 report and IBM hasn't returned to the $100 or $105 or $115 after that. But of course that was a good report and signaled a decent 2009 for EPS even though revenue was shrinking at that time.

        IBM has a low Beta. My guess is that because IBM trades on fundamentals absent big news that it behaves differently than a more high flying stock that technicals would measure better. Along those lines, the $139 cap set in 1999 seemed to contain IBM for over 10 years in my view was all fundamentals changing with the big acquisitions and divestitures beginning in 2002. IBM's stock price has lagged fundamentals since 2002 which is a big reason why the constant, methodical buyback program has been such a success. So far.

        It looks like ORCL fundamentals may be changing. IBM has been a slow grower with the big services base as well as Global Financing providing an annuity like revenue stream -- hardware is the wild card. ORCL may not be able to operate at the same level with software revenue back peddling and hardware has been a problem since the JAVA merger. We could see money coming out of ORCL into IBM if IBM can continue to ring out operating EPS and free cash flow growth from slow revenue. Based on ORCL's last report it looks like ORCL's model can't cope with slow revenue.

        So I'm optimistic based on IBM's $16.70 boggy this year -- if you assume $17 IBM is trading about 12.4x this year 's Operating EPS right now. That's also where the stock has been mid-year for a few years. Looks comfortable.

    • I'm all in with no powder left. But a heck of a buying opportunity for others.

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