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Technology Stocks : IBM
IBM 290.44+0.7%Nov 20 3:59 PM EST
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To: Robert Scott Diver who wrote (1912)11/27/1997 11:40:00 PM
From: Greg Jung  Read Replies (1) of 8218
 
Robert, the case against IBM current price is well known.
If you were paying at a Price/Sales ratio of 1, the 7% net margin
after-tax earnings makes it like a 7% industrial bond. There is little or no discernable $ growth in sales, and the only prospect is the services portion. But the price increases, earnings increase,
and PE stays the same. How's that? Share buyback and increased debt load. Maybe they've managed to convert $20b in debt to pre-crash Malaysian currency, in which case you deserve a windfall bonanza.
Buyback is represented only in the form of increased debt (or decreased cash). There is a table you can use in post 1815 where
I've tabulated items since its been in the black. What do simple ratios such as earnings/share mean in the face of the financial wizards at IBM? Last quarter they were able to engineer a reduction
in income tax to 31% from the previous Q's 35%. With offices around the world this is possible by simply re-categorizing the payment flows, I suppose. Perhaps Ireland had another special this summer?
I don't subscribe to any substantial "bear" case for global meltdown but I've sought justification on this thread, to no avail, as to why IBM is named a "value" stock. Maybe you can take a shot at it? Any other answer has boiled down to "well the price keeps rising, so it must be good".

Greg
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