Larry, good question.
As I have said in several previous posts, the 3rd and 4th Qtrs for IBM will be difficult. The Y2K "bug" is significant for IBM. It does, and will, impact their earnings. The Y2K issue is real, and will slow sales of large scale servers (excuse me, mainframes) and services as they transition to new engagements. IBM has been upfront about this, giving very early warnings over a year ago, and reinforcing them after last Qtrs earnings. The Street seemed to forget this. After a huge 1st half, IBM stock ran up way to fast. After the predictable slowing in the 2nd half, the stock tanked, way to fast. So,having said that, what is my "guess"? OK, here goes:
The 4th Qtr of 1999 and the 1st Qtr of 2000 will be tough. The Y2k effect will impact IBM. Qtr over Qtr comparisons for the 1st and 2nd Qtrs from 1999 to 2000 will not be good. IBM moved a lot of business into the first half of 1999, the year 2000 will return the flow to normal. If you understand this anomaly, it makes sense. First half of 99 a blowout, first half of 00 back to normal. Makes a lot of sense. However, does The Street understand? Don't think so.
So, what will this do to the stock price? I think, in my not so humble opinion, that IBM will move sideways for the next 6 months. The top at 130, and a bottom of 105. Any price under 100 is a steal.
I will watch the 2nd Qtr of 2000. If it looks "OK" or better, I think the second half of 2000 will be great The Qtr to Qtr comparisons will be great and push the stock to a new high. My guess? 160 by Xmass next year.
Dark clouds? I am afraid I see too much of the old IBM creeping back. You IBMers, what happened? Did the staffers and the process people just hide in a big warehouse in White Plains and reemerge when the coast was clear? This trend is of great concern to me. Will they come back and kill this great company?
I hope not...Comments? |
