thefatbaboon Posted January 21, 2015 Share Posted January 21, 2015 No IBM posts today? Must be close to a bottom. Funny. :) I haven't done a thorough analysis of the latest numbers yet. I just noticed something strange. The amount spent on buybacks was almost nil in Q4. This is unfortunate because their stock was at its lowest in Q4. On the other hand, it shows that they show discipline. It also shows that they ran out of buyback bullets before Q4 even started-- which tells me that they didn't expect the stock price to fall as much as it has. Otherwise you would have expected them to pace themselves throughout the year, and dollar cost average down. ... just some ramblings, because there were none today. :) They pushed hard beginning half year to reduce wghted avg share outstanding as much as pos in desperate attempt to hit "at least 18". Link to comment Share on other sites More sharing options...
Palantir Posted January 21, 2015 Share Posted January 21, 2015 I wish I had the cojones to actually short this the way I said I would when it was at 180s. :-[ Link to comment Share on other sites More sharing options...
Viking Posted January 21, 2015 Share Posted January 21, 2015 The company is clearly undergoing a very large transformation. Q4 results and 2015 guidance suggests more of the same going forward. The dividend will go up. Shares will continue to be repurchased, although at a lower rate than in the past ($6 billion remains on the current authorization). In this environment, I do not see any catalysts to cause the shares to spike. At the current price of low $150's the shares look fairly priced for those with a multi year time horizon (less than a 10 PE and close to a 3% div yield). Looking through the recent divestitures, the business looks stable, with growth perhaps returning in 18-24 months. The strong US$ is also a major drag and when it reverses this will help. I am looking forward to hearing what Buffett has to say; will also be interesting to see if Buffett is buying any more. If he is positive on the company and has been buying more then we likely will see a short term spike in the shares. Link to comment Share on other sites More sharing options...
orthopa Posted January 21, 2015 Share Posted January 21, 2015 This looks to be a classic Buffet play and historically he has added or started positions at times just like this. Cheap PE, buyback in place, 4-6Q turnaround in the business, strong free cash flow etc. If and when IBM does meet its $20 eps goal say 3 years from now your buying the stock at ~7.5 times those earnings and collecting a 3% div along the way. Your yield on cost could be more then 4% at that point with the wind at your back turnaround wise. I like it here and have been adding. Its amazing how Wall Street so highly rewards companies who grow revenue with no net income for quarters on end and no sign that it will happen in the future. Then when once said company turns $.01 of eps there is a celebration and the sky high PE is justified bc its a "growth" stock. Amazing it really is. I bet we see that Buffet bought more. I just re read the '79 annual report and he mentions he loves companies that buyback shares below intrinsic value instead of making expensive purchases. IMO IBM now is bits and pieces of annual reports he has written over time over what he sees in a company. Link to comment Share on other sites More sharing options...
thefatbaboon Posted January 23, 2015 Share Posted January 23, 2015 Link to comment Share on other sites More sharing options...
tede02 Posted January 25, 2015 Share Posted January 25, 2015 The Youtube video was very good. Rometty certainly seems competent and well rounded in the many technology issues of the day. IBM really is an interesting company. They remind of 3M with respect to how diverse their business is. Hopefully the firm can continue to translate all of the interesting things they do into growing revenue and profits. Link to comment Share on other sites More sharing options...
thefatbaboon Posted January 26, 2015 Share Posted January 26, 2015 tede, Personally I find her very annoying. She has a patronizing and overconfident manner - "Make no mistake" >:( - and she rarely answers questions clearly or succinctly. I followed Buffett into this stock and I have hated owning it. I don't care that it has gone down - it's just all the bloody Dilbert-speak sales crap and Dilbert-accounting adjustments and adjustments of adjustments. I swear the company must be stuffed to bursting with Dilberts. There are some reports today that IBM is considering laying off more than 100,000 employees. Link to comment Share on other sites More sharing options...
Ghost Posted January 26, 2015 Share Posted January 26, 2015 Rumour seems to be true http://www.bidnessetc.com/33231-international-business-machines-corp-ibm-to-layoff-over-100000-employees/ Link to comment Share on other sites More sharing options...
dwy000 Posted January 26, 2015 Share Posted January 26, 2015 Rumour seems to be true http://www.bidnessetc.com/33231-international-business-machines-corp-ibm-to-layoff-over-100000-employees/ Cringley is an IBM hater of legendary proportion. I wonder how much of this is more hope by him than reality. Link to comment Share on other sites More sharing options...
dwy000 Posted January 26, 2015 Share Posted January 26, 2015 Not too surprising. Company just came out with a statement: "IBM does not comment on rumors, even ridiculous or baseless ones. If anyone had checked information readily available from our public earnings statements, or had simply asked us, they would know that IBM has already announced the company has just taken a $600 million charge for workforce rebalancing. This equates to several thousand people, a mere fraction of what’s been reported. Last year, IBM hired 45,000 people, and the company currently has about 15,000 job openings around the world for new skills in growth areas such as cloud, analytics, security, and social and mobile technologies. This is evidence that IBM continues to remix its skills to match where we see the best opportunities in the marketplace.” Link to comment Share on other sites More sharing options...
LowIQinvestor Posted January 26, 2015 Share Posted January 26, 2015 26% of the workforce being laid off? I think not... Although ( come to think of it), couldn't " Watson" replace most of IBM's employees? ;) Link to comment Share on other sites More sharing options...
oddballstocks Posted January 26, 2015 Share Posted January 26, 2015 26% of the workforce being laid off? I think not... Although ( come to think of it), couldn't " Watson" replace most of IBM's employees? ;) Perceived vs actual abilities of Watson is interesting. If you head over to Hacker News (news.ycombinator.com) there is a thread on this. The site is very tech/developer-centric. On the thread are a number of posts by people who worked on the Watson team and they talk about abilities and limitations. Looks like the natural language processing has a ways to go. Link to comment Share on other sites More sharing options...
brker_guy Posted January 26, 2015 Share Posted January 26, 2015 Very good Cringely article on IBM http://www.cringely.com/ Link to comment Share on other sites More sharing options...
KCLarkin Posted January 26, 2015 Share Posted January 26, 2015 Very good Cringely article Oxymoron? Link to comment Share on other sites More sharing options...
Ghost Posted January 26, 2015 Share Posted January 26, 2015 http://www.reuters.com/article/2015/01/26/us-ibm-restructuring-forbes-idUSKBN0KZ1WF20150126 Link to comment Share on other sites More sharing options...
LowIQinvestor Posted January 27, 2015 Share Posted January 27, 2015 I'm a buyer today. Under 10 PE Long term guidance coming in early Feb. Dividend raise coming in April. Link to comment Share on other sites More sharing options...
Jurgis Posted January 29, 2015 Share Posted January 29, 2015 I listened to couple of Ginny interviews/talks and I got out feeling that she's one of these CEOs that are constantly mind-f*(&*(ing their audience. I guess most of CEOs are doing this, but with the good ones you don't feel it. With Ginny you do. Oh the constant repetition of "big data, analytics, cloud, security". And "Engage! engage, engage". I'd be more happy if IBM had Satya Nadella or Larry Ellison at the helm. I might be wrong though. :) Anyway, this doesn't mean IBM is/is not a buy. For me, it continues to be in the too hard pile. I'm pretty sure that in two years either bulls or bears will be saying "I told you so", but I am not sure which ones it will be. Link to comment Share on other sites More sharing options...
benbuffett Posted January 30, 2015 Share Posted January 30, 2015 Jurgis Remember what WEB said "I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." "The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they're on the operating table." Prost! ;-) Link to comment Share on other sites More sharing options...
Jurgis Posted January 30, 2015 Share Posted January 30, 2015 Jurgis Remember what WEB said "I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." "The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they're on the operating table." Prost! ;-) This is the Buffett who replaced two CEOs of KO in backroom deals when they run KO crappily. Apparently he's not so tolerant for idiots running a wonderful business. Buffett's quotes are nice soundbytes, but you are not Buffett, so at best you can hope that he will do the heavy lifting for you in this case if the sales continue to collapse. Good luck. :) Edit: BTW, I don't believe that IBM is a business so wonderful that an idiot can run it. I also don't believe that Ginny Rometty is an idiot. I don't like her aggressive push of IBM, but she's not an idiot. Whether she's a good CEO is still an open question IMHO. Link to comment Share on other sites More sharing options...
RadMan24 Posted February 1, 2015 Share Posted February 1, 2015 Jurgis Remember what WEB said "I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." "The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they're on the operating table." Prost! ;-) This is the Buffett who replaced two CEOs of KO in backroom deals when they run KO crappily. Apparently he's not so tolerant for idiots running a wonderful business. Buffett's quotes are nice soundbytes, but you are not Buffett, so at best you can hope that he will do the heavy lifting for you in this case if the sales continue to collapse. Good luck. :) Edit: BTW, I don't believe that IBM is a business so wonderful that an idiot can run it. I also don't believe that Ginny Rometty is an idiot. I don't like her aggressive push of IBM, but she's not an idiot. Whether she's a good CEO is still an open question IMHO. Buffett changed his mind on that one quote and mentioned that yes, even idiots can ruin great businesses. But listening to sound bites and all about Rometty to see if she is a good CEO is kinda backwards. She understands the business, what she has to do, and there are millions of shareholders of IBM. She has to keep it mainstream as possible and has done a good job at admitting the challenges and mistakes, as well as highlighting the successes. The next year or two will be key. Not sure how you can compare Rometty with Nadella, both inherited different businesses undergoing their own distinct ways set by their predecessors. Link to comment Share on other sites More sharing options...
Palantir Posted February 1, 2015 Share Posted February 1, 2015 I bet Ginny is going to be gone within 2 years. I wonder if Watson can be appointed CEO. ;D Link to comment Share on other sites More sharing options...
valueyoda Posted February 1, 2015 Share Posted February 1, 2015 Look at other technology value traps of the last few years, such as HPQ and Dell, in order to get a sense how these transformations play out. At $36 in 2011, everyone though that HPQ was a no-brainer given its low multiple, only to decline to $11 before embarking on a strong rebound back to $36 now. According to my estimates, IBM's EPS can fall back to $11 during the transformation. So 10-11x through earnings would result in a stock price of $120, meaning another 20% downside before a sustainable bottom is in. Link to comment Share on other sites More sharing options...
RadMan24 Posted February 3, 2015 Share Posted February 3, 2015 Look at other technology value traps of the last few years, such as HPQ and Dell, in order to get a sense how these transformations play out. At $36 in 2011, everyone though that HPQ was a no-brainer given its low multiple, only to decline to $11 before embarking on a strong rebound back to $36 now. According to my estimates, IBM's EPS can fall back to $11 during the transformation. So 10-11x through earnings would result in a stock price of $120, meaning another 20% downside before a sustainable bottom is in. If EPS dropped to $11, shares would surely drop below $100 during panic. That could happen, but if it does, a whole new evaluation would occur to make sure it really is "transitional" earnings. Flip side , if earnings rebound in the next few years, could go well above $200. Link to comment Share on other sites More sharing options...
sleepydragon Posted February 3, 2015 Share Posted February 3, 2015 Look at other technology value traps of the last few years, such as HPQ and Dell, in order to get a sense how these transformations play out. At $36 in 2011, everyone though that HPQ was a no-brainer given its low multiple, only to decline to $11 before embarking on a strong rebound back to $36 now. According to my estimates, IBM's EPS can fall back to $11 during the transformation. So 10-11x through earnings would result in a stock price of $120, meaning another 20% downside before a sustainable bottom is in. I think DELL and HPQ are different company from IBM. DELL is mostly selling commodity servers, they have the price advantage among small business, but they are just good at sellling machines. HPQ is similar to IBM in that they are both system integrator, but HPQ's integrator business is awfully run (a lot of buggy products). It has always been much harder for a supplier to be qualified by IBM and integrated into an IBM solution. It's the gold standard. A supplier pretty much have to beg. Once you are qualified by IBM, a startup can go to IPO. That's how powerful IBM is. And nowaday the IT has become so complicated, so expensive, an integrator like IBM that has great brand and know technology intimately well is essential to both the customers and the suppliers. I am long IBM. Link to comment Share on other sites More sharing options...
KCLarkin Posted February 3, 2015 Share Posted February 3, 2015 Look at other technology value traps of the last few years, such as HPQ and Dell, in order to get a sense how these transformations play out. At $36 in 2011, everyone though that HPQ was a no-brainer given its low multiple, only to decline to $11 before embarking on a strong rebound back to $36 now. According to my estimates, IBM's EPS can fall back to $11 during the transformation. So 10-11x through earnings would result in a stock price of $120, meaning another 20% downside before a sustainable bottom is in. I think you are looking at this backward. IBM sold their PC division in 2005. HP is splitting theirs off in 2015. HPQ is 10 years behind IBM in the last great transformation. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now