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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: yard_man who wrote (198745)10/21/2002 7:01:14 AM
From: stan_hughes  Read Replies (1) of 436258
 
One thing about IBM I have not seen mentioned yet but should be clearly evident to anyone involved in business valuations is that services never deserve or get the types of multiples you would assign to a manufacturing business.

That's primarly because there's nowhere near the leverage in re-billing employeee time and materials out that there is in producing finished goods from physical plant. I don't really care how solid the service contracts are, they still expire eventually and that limits the franchise value -- nobody pays big bucks for businesses like that.

Any M&A person would be acutely aware of such things and mark my words, you will see IBM's multiple erode over the years as they continue down the service revenue path
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