BTW, your restatement of my position is incorrect. Given a choice between two otherwise identical companies, debt is ALWAYS a negative. That doesn't mean one shouldn't ever issue debt because, as you point out, there are never two identical companies at issue. So if the addition of debt allows accomplishing a goal that could otherwise not be accomplished, its use can be appropriate. But if the same goal could be accomplished without the debt, that would be preferable. In other words, less IS better, all else being equal.
I think you understand what I'm saying, but prefer to not admit it for whatever reason.
Where I think we disagree is that I think IBM's debt/equity ratio is on the high side, especially during a business downturn. It's not currently a problem, because they have adequate coverage of the interest (and that's why IBM's debt rating is good), but they'd be in a stronger financial position without it. If enough of their customers defaulted, it could become a problem.
JMHO, as usual.
Charles Tutt (SM) |
