Jules-Re:"concerns for IBM's poor quality of earnings"
Don't feel bad at all about your advice to me. It was sound advice. I sold my IBM well before you replied to my March 98 post. True, I missed the IBM run up. However, I am happy that I sold my IBM shares when I did. With my substantial IBM profits I bought more shares in INTC, a company with substantially better fundamentals.
Did you see Alan Abelson's comments about IBM in the latest Barrons's? A few weeks ago they roasted Intel. This week it's IBM.
" And, needless to say (but we'll say it anyway), no inventory of
the causes of Thursday's selloff could possibly omit IBM's
disappointing operating results for the third quarter and
distressing forecast of more of the same to follow.
Big Blue -- and, boy, was it ever -- blamed the untoward turn
in its fortunes on an outbreak of fear and loathing among major
customers toward computers. As the culprit, moreover, it
fingered none other than the Y2K problem, which everyone
but Ed Yardeni has been rushing to proclaim the last great
nonevent of the century.
IBM's stock promptly sank some 15%, its market value shrinking by a tidy $29 billion. But what really put the wood to the poor shares was neither the bad news about the September quarter nor even the unsettling admission that the immediate months ahead looked rather blah.
No, what completely unnerved investors was the shocking
evidence that the talented Mr. Gerstner had apparently run
through his supply of magic tricks-a miraculous charge-off
here, a fortuitous announcement of a huge share buyback
there-that in the past time and again served so well to put a
cheery gloss on, and take the sting out of, even the most
dreary disclosure.
If IBM has finally depleted its seemingly inexhaustible store of
accounting elixirs and investor pick-me-ups, then -- and the
Street shivered at the thought -- the future for such ingenious
practices suddenly shapes up as quite problematic. Yet, as
even the rawest day trader knows, the art of creative illusion, in
which Mr. Gerstner and so many of his corporate peers grew
to excel, has been one of the sustaining props of this mighty
bull market.
What would Oz be like, investors inevitably and nervously
began to speculate, without the wizards?"
Regards, |
