Harry,
You have inadvertently unmasked one of the big problems that I believe has hurt my INTC/IBM, Sell/Buy, Put strategy for some time. That is that good comparisons between Intel and IBM, have been next to impossible to see. Because IBM and Intel are followed by two different analysts at most Sell Side brokerage firms, (not only at Merrill Lynch), the two companies are measured by different analysts with different standards and different criteria. Hence, direct comparison in terms of risk/reward, growth rates, dominance of markets, long term strategies, etc., are never examined. However, on rare occasions, as now, when the same analyst studies both companies, the preposterousness of IBM enjoying near the same
P/E as Intel, becomes apparent.
For those readers who are not familiar with the specifics of my arguments as to why I believe IBM is very overvalued, I invite you to read my views which are presented on this, as well as the IBM and INTC threads, since January.
Harry, while Dan is a fine analyst, and at one time was a competitor of mine, I have always believed that he wore rose colored glasses when it came to analyzing IBM. He has been in this business for a long time and has a reputation for presenting IBM's view in its
most optimistic light. Consequently, he enjoys a lucrative career with a reputation for being very close to IBM's management. I believe it would be very difficult for Dan to issue a "Sell" recommendation on IBM, unless the company was about to go down the tubes. Even then he would be the last analyst to report the fact. However, that being said, it is hard for me to understand why Dan would increase his price objectives on IBM, for the next two years on the eve of the Q2 earnings release Monday afternoon, without the benefit of seeing the earnings numbers first. Dan has either made a very GUTSY call here, or is privileged to advanced information. In either event, as a holder of many IBM Put options, Dan's price upgrade on IBM Friday, scares me. However, it should also be rememebred that Dan issued a similar optimistic report on IBM just prior to IBM's release of Q4 earnings in January. He was dead wrong then, as IBM went from 170 to 126 immediately following the release of those numbers. And for the life of me I don't know how he was able to turn IBM's price around after IBM's April Q1 release.
On Monday evening, I am hoping that Dan will be proven to be another Erica Klauer, but for this time for his being wrong on IBM.
Regards,
Jules
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