Stephen, Harry and All, Intel @52 IBM @118
I have posted my response to your question on the Intel thread, but I think both your question and my response really belongs here. Thanks for asking.
For the last year and a half, I believe, IBM was successful in being able to artificially prop up their earnings in order to meet analyst's estimates. They did this essentially, by lowering their tax rate and buying back their own stock. This tactic bought them time, Time enough, so that last quarter they were able to deliver truly impressive increases in revenues and earnings. At the same time, over the last year and a half, they were able to transform themselves from a directionless company, which was floundering, to a company with an UNDERSTANDABLE MISSION.
You ask why did I miss this fabulous run up in IBM's price?
Well, First of all, up until this last reported Q1, I always believed that analysts would see through IBM's disguised earnings and recognize them for the poor quality which I believed they were. Second, I underestimated the power of IBM's Investor Relations. And Third, I never thought that Intel would allow IBM to capture the perceptions, in the Investor's mind, that IBM was a better way to invest in the Internet than was Intel. For the latter I fault Intel's necessary preoccupation with the FTC, and their Investor Relations Department, which I think, has been asleep at the wheel. Something I thought, two years ago, could never happen.
But Stephen, just so you don't misunderstand my current posture. I am still long my Intel core position and anxiously await, as we near the Merced time frame. I would hope that then the momentum will swing from currently being in IBM's favor, back to Intel I believe at that time, Intel can and will make up for lost time.
Jules
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