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So anybody grabbing IBM on today's big decline?
I'm really torn. It is a great name with great history that scores well (very well) in my personal ranking system.
If it were a consumer staples company, I'd be buying with both hands right now. But I'm much more skittish about tech.
Thoughts?
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I agree. I'm long but won't be adding as I have as much as I'm comfortable with right now.
Could turn out to be a great opportunity though if they can get the ship righted.
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10-20-2014, 10:17 AM
(This post was last modified: 10-20-2014, 10:19 AM by Roadmap2Retire.)
As someone working in the tech industry, I find IBM to be a dinosaur. They are stuck in the old ways and are too sluggish to move forward. And especially in an industry where things move fast, even if you are standing still - you are considered moving backward.
Technologically, IBM is just resting on the old accolades. They have already sold their server and desktop business to Lenovo, selling the chip business now. They still lead in a few fields like supercomputers and AI, but who knows how long that'll last (Google and Microsoft have some pretty fantastic/smart teams in their AI divisions although the target market slightly different - but still look out for competition there).
This is a company that has its third quarter profits fall 99%!! And pretty much abandoned its 2015 forecast. That is just unacceptable for a company with a heritage like IBM. And what is the response to that? Board is being asked to authorize more buybacks! Over the last few quarters, they have unveiled some pretty horrific numbers and have resorted to financial engineering like buybacks to prop up their numbers. Buyback programs like IBM's are the reason why I hate the buyback programs.
Can you tell that I hate the stock? IBM has the resources to turn things around - which could result in a great contrarian play. I for one would never invest in IBM under the current conditions.
On a side note, I just opened a small starter position in Apple last week. I am speculating here, but with the rumors of Apple getting introduced into the DJIA after the stock split, I think IBM is one that could get kicked out of the index.
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Thanks for the insights, R2R -- they reflect many of my fears about IBM. It is hard to imagine them not getting the ship righted (as Eric put it), but I suppose that is not enough to decide if this is a good entry point.
On a related note, I read elsewhere that Buffett's average price for his considerable stake in IBM is around $167. For what it is worth.
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I exited my IBM position a couple months ago due to a couple reasons:
1) The (excessive) Financial Engineering R2R alludes to
2) Anecdotal stories from multiple inputs regarding active + supported attrition of top talent by means of salary + upward mobility negligence
I'm not going to attempt to talk anyone out of IBM as on paper the numbers are pretty great as Kerim said.
I just perceive too many great fish in the investing sea to constantly feel bothered by the IBM line item in my portfolio.
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10-20-2014, 11:11 AM
(This post was last modified: 10-20-2014, 11:12 AM by Roadmap2Retire.)
(10-20-2014, 10:29 AM)Kerim Wrote: On a related note, I read elsewhere that Buffett's average price for his considerable stake in IBM is around $167. For what it is worth.
Ah yes. I was surprised when after years of avoiding tech stocks saying that he doesnt understand the business, Buffett ended up picking IBM. I have tremendous respect for Buffett and pay attention to what he says and does.
Just last week he announced that his investment in Tesco was a mistake and has been dumping those shares. So, I wont be following his investments blindly into IBM either  Im happier with a missed opportunity here in case IBM turns around.
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(10-20-2014, 09:38 AM)Kerim Wrote: So anybody grabbing IBM on today's big decline?
I'm really torn. It is a great name with great history that scores well (very well) in my personal ranking system.
If it were a consumer staples company, I'd be buying with both hands right now. But I'm much more skittish about tech.
Thoughts?
I seem to have the opposite view of IBM than everyone else. But I'm not as educated on the company as others. I certainly invested in it on its decline, after watching it initially go from $183/share to the mid $190's. It was certainly a pleasant surprise.
I am quite confident in IBM. The reason I quoted your comment, Kerim, was your remark about if it was a consumer staples. Sometimes I refer to IBM as a "business staples" company. IBM's software is necessary for the day to day operation of so many businesses today that it's amazing. I work in banking, and our Lotus Notes and FileNET programs (two EXTREMELY important software programs that without which, we couldn't service customers) are IBM products. I've been to numerous businesses, including Starbucks, a pizzeria, and a Chinese restaurant, and saw the IBM logo right on their computers and other equipment. Unlike Microsoft and Apple, which makes non-necessary items like Xboxes and iPhones (don't get me wrong; as a consumer, I'm surgically attached to both), IBM makes products that a business needs on a day to day basis. Just as you and I wouldn't stop eating food or using shampoo in an economic downturn, businesses won't stop using IBM's products.
And as for whether they will turn themselves around, I have confidence in IBM more than any other tech company. I'm not say Apple is a bad company--a cursory glance at their stock will show that it's far from--but Apple doesn't have the decades of experience that shows me that they can adapt to a changing technological paradigm. Sure, they invented the smartphone, but they were practically nothing before that (they paled in comparison to Microsoft), and what happens in the future when the smartphone is as obsolete as the cassette player? Will Apple be able to adapt? I don't doubt their ability, but they are untested in that regard. But IBM was around since 1910. 1910! This is a computer company that predates computers! Not only has IBM adapted to technological paradigms changing around them, they've adapted to EVERY SINGLE ONE and stayed at the top the entire time. I'm finding it hard to believe that they are going to collapse now.
Of course, as someone who is NOT in the tech industry (like R2R is), take my comments with a grain of salt and take his with...........well, a much healthier food. I look at it from the point of view of an investor, not an insider or anything. But I feel that IBM is a strong company to invest in, and I followed that up by doing so.
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I have nothing against IBM's past technological advancements. The company is where it is because of that vision and the innovation.
For what its worth, Mark Cuban has similar thoughts on IBM as I do.
http://www.businessinsider.com/mark-cuba...ny-2014-10
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Boy, for anyone interested in accumulating IBM, today is a great opportunity. Down 3 percent on lower guidance. I still think this is a tougher buy than some others right now (XOM, JNJ), but I am tempted to add at these multi-year lows.
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(01-21-2015, 11:12 AM)Kerim Wrote: Boy, for anyone interested in accumulating IBM, today is a great opportunity. Down 3 percent on lower guidance. I still think this is a tougher buy than some others right now (XOM, JNJ), but I am tempted to add at these multi-year lows.
I agree. I am overweight after my most recent purchase in December so won't be adding anymore, but this looks like a great opportunity to get in. Yield is up to nearly 3% now and there should be another announced dividend increase in April.
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I'm extreamly tempted at this point to initiate a position in IBM but I'm not going to.
The growth in cloud, mobile and security give me confidendce but something doesn't feel right, I just don't like the brand.
I know I shouldn't let personal bias get in the way of investing but I want to be able to SWAN. With IBM i'd just worry too much (even with 30+ years until retirement).
Decisions decisions decisions....
I bought 10 more shares of IBM today. I've got about 25 years until retirement, and I'm not too worried about them. Coming up on a 3% dividend rate. While it does have some problems, it still makes a ton of money. While it's not increasing profits like many would like for them too, they are still a very profitable company.
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