Is IBM one of Buffett's best investments or a mistake?
Like everyone, Buffett can be wrong. This sometimes happens as with Tesco. With IBM the situation is different. At the moment, everything is fine but it is true that in the future this could be a bad investment.
By the way, Charlie Munger said “I would say the jury is out” on IBM’s prospects and “It may work in a mediocre way, it may work big, I just don’t know.”
I imagine that Buffett who reads IBM's annual reports since 50 years knows what he's doing. But there are many surprises in the technology sector.
Even if the cloud business is not a winner-takes-all market, IBM has only 7% of market share, far behind Amazon which has 31%. Furthermore, even if Watson is promising, there are many uncertainties and challenges.
For my part, I think IBM could still be a good investment. Management is extraordinary and their strategy is coherent. This company has experienced many things in its history and has always been able to improve its results over the long term.
However, I am still surprised that Buffett has invested in this business, there are many uncertainties. Google, Microsoft and Amazon are serious competitors. |
