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International Business Machines Corporation Message Board

  • stockmeister999 stockmeister999 Jan 3, 1998 9:56 PM Flag

    Sell

    I bought 15000 at 87� and sold yesterday........my advice to you all is to get out now. This stock is going to be headed down this coming year........my guess would be to right around 80 or so by September......maybe lower....so get out with your profits now.

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    • HRTuck:

      I think before the '90's, it was fairly common for pension plans
      to have Cost of Living Adjustment clauses. I work at AT&T and I
      think we had one for the longest time. Unfortunately, I believe
      that COLA's have largely gone the way of the dinosaur. My guess
      is that it is resting comfortably in the deep dark sea along
      with the job security that you and I knew in earlier times with
      both IBM and AT&T...

      As a shareholder, I'd bet that there would be an uproar among
      institutional investors and even non-employee shareholders if IBM
      chose to increase the pension payments for retirees rather than
      returning those excess funds to the income statement and then to
      the balance sheet...It's certainly not that I believe that you
      don't deserve to live comfortably in retirement; it's that these
      funds were diverted from shareholders, not from employees.

      By the way, this issue will probably be Page 1 news if and when
      IBM adjusts and reclaims the over-funding.

      NJFred

    • As a taxpayer I am pleased that IBM's Pension Fund is fully funded.
      As a long time stockholder I am obviously pleased after the 1991 to 1993 price drop. That was mainly caused by ill conceived advantages of client-server.
      As an IBM Retiree since 1991 I am covered by an excellent medical plan at no cost to me.
      Prior to 1990 IBM periodically increased monthly retirement payments. Inflation in the 60's,70's and 80's had eroded their value however many private pension plans took no action.
      Inflation in the 90's has been low, however it would be nice if IBM dispersed some of the over funding to present Retirees.

    • Well, maybe not 10-15 billion, but how about 4 billion a year for the next 10 years (assuming growth in "principle") added to IBM's bottom line. That would certainly not be unreasonable from IBM's point of view. The company could use it to buy back its own stock or fund a dividend increase, who knows?

    • Rebjr:

      Thanks for the update. The key issue with the original over-
      allocation of funding for the pension funds is that it was set
      based on inflated assumptions that were established by the
      regulatory and accounting standards at that time...But, $34 B !!!
      I'd bet that much of the 1996 growth was based on IBM price
      appreciation. So some of it could be eroded by market forces...

      The fact that IBM (and some other large companies) haven't
      reclaimed that over-funding since the healthcare cost inflation
      hasn't continued as before, is simply CONSERVATIVE Accounting.

      Now, this Federal issue of possibly taxing the companies based on
      that Overfunding sounds like an endorsement that it could be
      dropped directly to the bottom line if it is reclaimed...It also
      sounds like the CFO of IBM would be prudent to at least START
      recouping those over-funded dollars...if for no other reason than
      to demonstrate due diligence in trimming the over-funding...

      Hummmmm, what would $10-15 Billion in additional profits do to
      the stock price at a P/E of about 20...??? Just kidding, there,
      Tekkie!

      P.S. The reason that I don't claim to know what IBM is doing
      with the proceeds of their debt issues is that I'm a long-term
      investor who doesn't feel the need to double check everything
      that they do...There are so many damn people in Gov't who make it
      a point to monitor all that stuff, not to even mention the
      Wall Street analysts and the institutional investors. Those guys
      won't let any crapola go on, and the CFO would be very hesitant
      to push the envelope anyway because the image and financial
      confidence of IBM in the business community is extremely
      important. It's not like IBM is a recent IPO thrown together just
      to have some founders cash in on an inflated stock market. Not
      like some of the small cap stocks that I see hyped here... So, I
      go down the road trying to keep the big picture in mind and
      monitor the macro fundamentals...

      NJFred

    • Me too, but I can't start drawing until 2022 and even then, only $938 a month. That's not even minimum wage today and I earned over 160K total for the last three years there. That's one big reason for why the fund is overfunded!

    • That pension fund better look out for the politicians. It has been overfunded for quite a while and several years ago when Congress was looking for sources of revenue, they were seriously considering taxing the overfunded portion of corporate pension funds, with IBM being a prime target. They were trying to justify it by saying companies were hiding porfits by dumping money into the pension funding, where in IBM's case it was successful investment driven.

      That possibility died for the time being, but we all know about politicians and there need for more money. If they pay attention to this, they may be coming back.

      Hope not, I get paid from that pension fund every month.

    • Well, well, guess what mail I just opened? It's the 1996 Summary Annual Report on the IBM Benefits Plan for the year ending 12/31/1996. The current overfunding of the pension plan now stands at $34,354,732,958 -- that's 34.4 BILLION dollars!

    • I was an IBM'er for almost 20 years before deciding to leave to start my own business in Nov. 1996. All IBM'ers get an annual statement that nearly all throw away rather than read (based on conversations over the years with many hundreds of fellow IBM'ers). The statements showed the financial status of every
      IBM benefit plan including the pension fund. For 1995, the pension fund was over-funded by 29 BILLION dollars (current balance minus all projected expenses). Pretty astounding, huh?

      Also, in Oct. 1994, the pension plan was changed so that our
      "vested rights" was cut in half (my "vested rights" changed from
      $18,682/year if I retired at 65 to $9,233/year under the same conditions). IBM apparently can and has changed what vesting means so that the amount of over-funding can be manipulated. In
      the next "hard-time" (financially-speaking), this money can be tapped to bolster the bottom line simply by making an accounting
      change.

      I throw these items out here so that investors can be aware of
      some potential areas that IBM can manipulate the balance sheet....

    • GO WorldCom!!!! Post to the WCOM thread.

    • you don't know whether ibm is borrowing money to buy it's own stock back? well then freddy you might as well lose your money
      in a stock love affair as well as anywhere else. forget the billions at the end. let's deal in simple arithemetic. how much
      money did ibm earn the last two years. how much money did they pay out in dividends. how much stock did they buy in dollar
      amounts. how much money did they borrow during the same period. You can use a calculator if you want. no need for a fancy machine.
      Now if they didn't earn that much money. Where did it come from. For verification see their current ration two years ago and see
      it now.See my comment on the death throes of a star. Check out super novas. They are wonderful to see. There was one in 1987
      the year of the crash, the year Ibm sold its 29% stake in intel --Akers made tjhe greatest blunder in american capitalistic
      history. The man he fired is on magazine covers-as the man of the year-what a management/ Trust your money with them-sucker.

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