IBM Message Board - Msg: 3213866

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Technology Stocks : IBM

IBM 300.94

+0.2%

Dec 19 3:59 PM EST

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To: MR. PANAMA (I am a PLAYER) who wrote (2179)	1/20/1998 5:56:00 PM
From: Earlie	Read Replies (4) of 8219

Grim: IBM numbers will likely receive a "disappointing" rating before 8:30 AM tomorrow (institutional calls). Through no fault of the company, the street talk had slowly but surely taken on a bullish tinge coming into the report. Revenue number isn't pretty. No growth now for several quarters, and high margin business (hardware, software, and especially maintenance, the company's former cash cow) continues to fall. This will worry even the loyalists. Service contracts are low margin business (IBM's main competitor has been posting disappointing earnings for several quarters). It is also risky if Y2K promises have been made IBM bought back $2.0 billion in stock in the quarter. Compare this with the earnings (virtually identical). Is this good business? Earnings are also essentially flat, as they have been for several quarters. This will not engender excitement. The per-share earnings were boosted by the share buy-backs. The debt, (when off-balance sheet is included) is climbing. Most has been added to finance share buybacks. This does not excite the rating agencies. Telephone conference call had better be one of Mr. G's best, or tomorrow will be a down day. 18 months ago, one could have bought plenty of IBM stock at half the current price, to acquire very similar performance. A growth stock, it is not. Earlie

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