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International Business Machines Corporation Message Board

  • Shmohawk99 Shmohawk99 Dec 15, 1997 11:29 PM Flag

    anybody's guess

    I'm an IBM stockholder with no idea what to do with it. Everybody says something else. Sell now, sell later, don't sell at all. Someone told me that they studied IBM and it's way under valued. He claims it's worth 200!! I think he's smoking some funny cigarettes, but hey, you never know. Anyone have any ideas?

    Peace, love, and granola bars.

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    • Shmohawk:

      I'm a holder of 800 shares that I bought at an average of $33, (Split adjusted). I'm a long-term investor who likes to think he buys when Wall Street is crapping all over a company undeservedly. So, long-term turnarounds are my preferred bias...

      It's time for me to re-iterate my thoughts on why IBM is still a strong BUY. And I'll try to be brief...If anyone wants the long version, email me for more details. :-)

      1. IBM's Price/earnings ratio is ridiculously LOW for a company of this quality, in comparison to the market as a whole.

      2. IBM's "market cachet" is still phenomenal! I sold against IBM a few years ago, and even in '90-'92, large customers WANTED IBM to succeed. There is a marketing brand value with IBM that is still unbelievable, and is not represented with today's share price. (And things are sooooo much better for them today than it was back then!)

      3. IBM's movement into services/outsourcing puts them into very high margin revenue dollars, where their experience puts them head and shoulders above most of their competitors. And guess what? The trust that large customers have in the IBM name and reputation makes harvesting this huge trend in MIS so much easier for them than for others.

      4. IBM's movement (belatedly, to be sure) into the Internet and Electronic Commerce. Their strategy to commercialize the 'Net and popularize E-Commerce will do for it what their endorsement of the PC did for desktop computing. They are carving out a leadership position in this market, well before the profits will begin to flow. Their positioning in the server market place will also grow.

      5. Financial and market stability: As the market becomes more and more suspect, many institutions (and baby-boomers with
      401(k)s) will be looking for "safe harbors" to move their equity investments into. This "flight to quality" will buoy IBM's share
      price until the bulls rampage on Wall Street again. (Can you imagine how highly regarded this management team is among the big
      institutional investors, who basically drive the market? Can you imagine how foreign investors view this bluest of Big Blue chips, as the
      rest of the world moves into equities investments within this global market?)

      Damn, I let it get away from me again...Hope that I didn't bore anyone to tears...:-) And I didn't even talk about cost-cutting efforts, share buy-backs, or the potential of their R&D efforts!

      Bottom line: Buy and hold for the foreseeable future. Dissenting opinions welcome.


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