LowIQinvestor Posted November 20, 2014 Share Posted November 20, 2014 Thought this snapshot of the IT services industry market leaders would be helpful: (IBM #1 market share with 6.6%) http://www.bloomberg.com/visual-data/industries/detail/it-services And Software Industry Leaders: (IBM #2 market share with 7.5%) http://www.bloomberg.com/visual-data/industries/detail/software Interesting to compare the "performance metrics" of various competitors. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 2, 2014 Share Posted December 2, 2014 Always fun to save some news headlines like this: "IBM - The Emperor Has No Clothes" and review in a couple years. My guess is that IBM will be at least $200 a share by then. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 3, 2014 Share Posted December 3, 2014 http://finance.yahoo.com/news/ibm-signs-1-25-billion-220232763.html "IBM seeks to differentiate its offering by focussing on hybrid clouds, which mix together the private, on-premise computer systems for which it has long been known with newer public-facing Internet, mobile and analytics systems, allowing clients to move existing systems to the cloud at their own pace. This hybrid approach means companies can wait for years before they consider moving their most sensitive core financial systems to the cloud computers. It also gives them the option of never having to move." IBM Return on Equity (ttm): 93.34% IBM PE ratio(ttm): 10 Link to comment Share on other sites More sharing options...
Palantir Posted December 3, 2014 Share Posted December 3, 2014 ^And it makes them run straight into MS's path... Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 4, 2014 Share Posted December 4, 2014 "The role of a steward" - Commentary from the CFO of IBM: http://www.cnbc.com/id/102241195?__source=yahoo%7cfinance%7cheadline%7cheadline%7cstory&par=yahoo&doc=102241195 Thought this was a fantastic read Link to comment Share on other sites More sharing options...
CorpRaider Posted December 5, 2014 Share Posted December 5, 2014 Low and KC, How did you guys get comfortable with the increased leverage? Link to comment Share on other sites More sharing options...
KCLarkin Posted December 5, 2014 Share Posted December 5, 2014 Low and KC, How did you guys get comfortable with the increased leverage? Why would I be uncomfortable with their debt? - AA- debt rating - Issuing 10 year bonds at 95 basis point premium over treasuries From 2013 Annual Report: - Total debt = 33B - Global Financing Debt = 24.5 B - Operating Debt = 8.5B (total debt less Global Financing debt) - $15B FCF - $11B cash and securities - $10B untapped credit facility - 46x interest coverage Some people get confused about IBMs debt because: a) They have an artificially high Debt/Equity ratio because they have bought back so much stock. D/E is high because of low Equity not high Debt. b) They have a large financing arm (responsible for most of the debt). You have to remember that this debt has corresponding assets. IBM borrows at low cost and then lends out at a much higher rate. Credit quality might be a risk but I feel like this was stress-tested in the great recession. Personally, I am much more worried about their pension obligations. I am not an expert on pension accounting but Buffett is. Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 10, 2014 Share Posted December 10, 2014 IBM, Apple Reveal First Fruits of Partnership Apps for Apple’s iPhone and iPad Are Designed for Businesses http://www.wsj.com/articles/ibm-apple-reveal-first-fruits-of-partnership-1418218201 Link to comment Share on other sites More sharing options...
berkshire101 Posted December 12, 2014 Share Posted December 12, 2014 Anyone taking a closer look at IBM in the $150s? Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 12, 2014 Share Posted December 12, 2014 just had an order filled this afternoon. My stomach churned a little so I'm thinking I will be ok on this one. I am eager to hear guidance in January. Today's price seems to imply that they will guide way down from their $20 EPS target. If they guide to $19 EPS I think it is worth at least 15% more than where it is today. Link to comment Share on other sites More sharing options...
KCLarkin Posted December 12, 2014 Share Posted December 12, 2014 Consensus EPS for 2015 is $16.83 according to yahoo finance. Link to comment Share on other sites More sharing options...
compoundinglife Posted December 12, 2014 Share Posted December 12, 2014 Value Line had 17 in their october report FWIW Link to comment Share on other sites More sharing options...
obtuse_investor Posted December 12, 2014 Share Posted December 12, 2014 For clarity sake, we may need to qualify those quoted eps numbers with GAAP or ibm's "operating" eps. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 18, 2014 Share Posted December 18, 2014 But I thought IBM sold mainframes!? http://finance.yahoo.com/news/ibm-says-cloud-business-enjoying-210000287.html http://blogs.wsj.com/law/2014/12/17/ibms-outgoing-general-counsel-looks-back-at-the-future/?mod=yahoo_hs Link to comment Share on other sites More sharing options...
KCLarkin Posted December 18, 2014 Share Posted December 18, 2014 But I thought IBM sold mainframes!? http://finance.yahoo.com/news/ibm-says-cloud-business-enjoying-210000287.html http://blogs.wsj.com/law/2014/12/17/ibms-outgoing-general-counsel-looks-back-at-the-future/?mod=yahoo_hs In 2013, the analytics business was $16B. The entire hardware business was $14B. IBM has divested $5.5B in hardware revenue this year. If my lazy math is correct, in 2015 IBMs hardware business will be smaller than Oracle's as a percent of sales. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 30, 2014 Share Posted December 30, 2014 Don't forget that there is a potential catalyst in January when IBM will give guidance. I just can't see how IBM trades any lower than 9 time earnings unless something catastrophic happens. Doesn't seem unrealistic for IBM to trade at 12 PE on 2015 earnings. ($16-$18.50 EPS?) We will see soon what the forecast is for 2015... Link to comment Share on other sites More sharing options...
KCLarkin Posted December 30, 2014 Share Posted December 30, 2014 Don't forget that there is a potential catalyst in January when IBM will give guidance. I just can't see how IBM trades any lower than 9 time earnings unless something catastrophic happens. Doesn't seem unrealistic for IBM to trade at 12 PE on 2015 earnings. ($16-$18.50 EPS?) We will see soon what the forecast is for 2015... 2015 guidance might be a positive or negative catalyst. To me, it looks like Q3 was meant to be the "big bath" and that $150.50 will be the bottom. I finally reviewed the Investor Briefing slides. They are expecting upswing in the System Z product cycle in 2015. This could trigger a change in market sentiment. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 31, 2014 Share Posted December 31, 2014 To me, it looks like Q3 was meant to be the "big bath" I concur. Here is my CNBC headline for 2015 " Big Blue is Back!?: IBM outperforms the Dow!" Happy New Year! Link to comment Share on other sites More sharing options...
rishig Posted December 31, 2014 Share Posted December 31, 2014 My friend Jana recently did a write-up on IBM: http://janav.wordpress.com/2014/12/13/ibm-revisited/ This is a really great blog to follow. Jana's background is very interesting. He grew up in India, but didn't have the opportunity to go to college. He studied on his own and got a job in Computer Science. Moved to the US and climbed the ranks. Joined LinkedIn early on and did very well. Jana is very thrifty and that helped him quit LinkedIn at a young age (quit in Dec 2014). He is a voracious reader and is always learning something new whenever I talk to him. Now, he plans to focus on investing full-time. Link to comment Share on other sites More sharing options...
jawn619 Posted December 31, 2014 Share Posted December 31, 2014 My friend Jana recently did a write-up on IBM: http://janav.wordpress.com/2014/12/13/ibm-revisited/ This is a really great blog to follow. Jana's background is very interesting. He grew up in India, but didn't have the opportunity to go to college. He studied on his own and got a job in Computer Science. Moved to the US and climbed the ranks. Joined LinkedIn early on and did very well. Jana is very thrifty and that helped him quit LinkedIn at a young age (quit in Dec 2014). He is a voracious reader and is always learning something new whenever I talk to him. Now, he plans to focus on investing full-time. He seems like a really smart guy. I read his post about mental models. http://janav.wordpress.com/2013/06/26/latticework-of-mental-models/ Link to comment Share on other sites More sharing options...
crastogi Posted January 2, 2015 Share Posted January 2, 2015 My friend Jana recently did a write-up on IBM: http://janav.wordpress.com/2014/12/13/ibm-revisited/ This is a really great blog to follow. Jana's background is very interesting. He grew up in India, but didn't have the opportunity to go to college. He studied on his own and got a job in Computer Science. Moved to the US and climbed the ranks. Joined LinkedIn early on and did very well. Jana is very thrifty and that helped him quit LinkedIn at a young age (quit in Dec 2014). He is a voracious reader and is always learning something new whenever I talk to him. Now, he plans to focus on investing full-time. Thanks for sharing Rishi! Nice writeup. Link to comment Share on other sites More sharing options...
Nnejad Posted January 2, 2015 Share Posted January 2, 2015 My friend Jana recently did a write-up on IBM: http://janav.wordpress.com/2014/12/13/ibm-revisited/ This is a really great blog to follow. Jana's background is very interesting. He grew up in India, but didn't have the opportunity to go to college. He studied on his own and got a job in Computer Science. Moved to the US and climbed the ranks. Joined LinkedIn early on and did very well. Jana is very thrifty and that helped him quit LinkedIn at a young age (quit in Dec 2014). He is a voracious reader and is always learning something new whenever I talk to him. Now, he plans to focus on investing full-time. The valuation section could have been simplified to, "I think it should trade at a 7% earnings yield." Link to comment Share on other sites More sharing options...
FCharlie Posted January 12, 2015 Share Posted January 12, 2015 So, I just did some basic number crunching and saw that from the beginning of 2009 (The worst of the recession) until the end of September (The most recent data).... IBM generated something like $90 Billion of free cash flow. Does anyone believe the next six years will be much different overall? Link to comment Share on other sites More sharing options...
KCLarkin Posted January 12, 2015 Share Posted January 12, 2015 So, I just did some basic number crunching and saw that from the beginning of 2009 (The worst of the recession) until the end of September (The most recent data).... IBM generated something like $90 Billion of free cash flow. Does anyone believe the next six years will be much different overall? They are guiding for lower FCF conversion going forward ("in the 90s") so that will be a minor headwind. Link to comment Share on other sites More sharing options...
HWWProject Posted January 12, 2015 Share Posted January 12, 2015 I get a normalized $16B fcf (Owner Earnings). On a no-growth stock (revenue nearly unchanged for a decade), max I will pay is 10 x fcf, so values IBM at $160B, or right at $160 per share. Giving minimum 25% discount for margin of safety, my buy price would be $120. Have wondered for some time what Buffet sees in the stock, had assumed there was a growth story somewhere not obvious to me. Link to comment Share on other sites More sharing options...
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