Re: IBM (and INTC) Doug Kass in Alan Abelson column states:
Money manager Doug Kass points out that this marks the third
quarter in a row that Big Blue has missed top-line forecasts by
massive amounts: $1.1 billion in 2001's second quarter; $700
million in the third quarter and $1.1 billion in the fourth quarter.
Doug points out that fourth-quarter revenues were about on a
par with those of fourth-quarter 1997; earnings were somewhat
higher in the final quarter of '01 than four years earlier -- $1.33
versus $1.06 -- but only by grace of such nonoperating stuff as
share repurchases, a lower tax rate and higher pension accrual.
Yet IBM's stock at the end of 1997 stood at 53, while at the end
of last year, it was more than a little higher: $120, to be precise.
What makes the disparity all the more glaring is that in '97 the
prospects for tech generally and IBM in particular were glowing,
in sharp contrast to the current outlook, which, no secret, is both
beclouded and uninspiring.
Doug goes through a similar exercise for Intel, whose recent
fourth-quarter revenues were roughly equivalent to those four
years earlier. At the close of 1997, Intel sold at 17 on earnings of
$1. Intel's stock now is priced at twice that level, but earnings
are only half as much now as they were then. And four years
ago, the PC business was booming; in 2001, it suffered its first
decline in 17 years, and this year doesn't shape as gangbusters,
either.
In short, tech valuations are still way out of whack, and for
investors, it's still very much caveat emptor. |
