Mohan and All, The IBM eps report was a joke. The eps "grew" 7 pct., more than all of which was a tax decline and repurchase of shares. And they had so much free cash flow that debt skyrocketed (to buy back shares?). Huh!? They did admit that business stank, but so far the market hasn't caught on to that. The geek from Merrill Lynch called it a "dull" quarter, but he isn't changing his price target of $150. Why should he? The market doesn't care about lousy eps or dead-skunk-in-the-middle-of-the-road accounting.
But, let's give them the benefit of many, many doubts and say the 7 pct. is real. Does a co. with a 7 pct. growth rate, ballooning debt, an admittedly tough quarter ahead of them, and market share losses in nearly every area deserve a pe ratio of 17? Not where I come from. And if the 7 pct. isn't kosher, they deserve much less.
If they have all the cash they brag about, why don't they double the dividend? Not quite that comfortable with the future, eh?
It is hard to believe that all the folks who were burned by this turkey for so many years have suckered back into their fishy stories big-time. MB |
