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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: sun-tzu who wrote (143367)	1/13/2002 7:24:06 AM
From: Earlie	Read Replies (3) of 436258

Sun: I will take the other side of that bet, although not aggressively as "I hear yah" with respect to the current market climate. IBM is expected to come up with $1.35 (last I looked). That is a long way fron the $0.90 of last Q. We shall see. IBM never warns, so there has been no warning with this one. Yes, basically the Christmas season is the major selling season for most companies, but IBM sells services and a bunch of products to corporations, and they have bought squat of late. The company has been laying off workers (without announcing this fact), which does not suggest any kind of rebound in revs., which have been trending down for several quarters. My spies as well as my own digging point to a significant fall-off in revs again this past quarter. The market is paying twice as much for IBM's stock today as it did a few quarters ago. This in spite of a continuing reduction in revs., earnings and balance sheet strength. The stock price reflects the normal migration of fund dough to an ever-shrinking collection of untarnished "darling" stocks that is typical of a late stage cycle. That same group can be ruthless if they don't like what they see. Even a whiff of difficulties in this past quarter would likely cause that gang to move dough to greener pastures. I like this kind of situation, at least for a short term hold as the numbers are digested. Gerstner is an accounting wizard, but the SEC has gone out of its way to warn that accounting nonsense must be curtailed this year or somebody will be publicly hung. He's getting close to taking his leave, so the desire to exit on a high note must be excruciatingly intense. On the other hand, he's got 9/11 as a perfect excuse for any problems. Given the pile of accounting rubbish that has accumulated in IBM, it would make sense to do some cleaning now while the perfect excuse is at hand. We shall see. Best, Earlie

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