Jules B. Garfunkel. Re: "sell side brokerage analysts seem to be measuring the price evaluation of IBM and INTC using two different measuring sticks."
I agree with you and think you have hit on something very important here. I believe that analysts with a thin knowledge of technology put IBM in the "blue chip" category along with GE, Merck, etc. It is a SAFE technology company with a long heritage of stable (albeit turbulent recently) revenues and earnings. Consequently, they cut IBM more slack, and think its PE is low when compared to GE and Merck.
They have convinced themselves that IBM is different than Intel or CPQ and when the facts intrude construct ever more complicated defenses. As we know, this can't last.
In fact this earnings season may force these analysts to see reality, when, after all is said and done, they must compare Intel's excellent results with mediocre IBM ones. This will be even more difficult for these analysts to swallow if CPQ has an excellent quarter and does not issue the types of warnings about Asia that IBM did. (I suspect CPQ will not 'cause their exposure to Asia is a lot less.)
I believe that MOST analysts DON'T GET IT, in terms of the true paradigm shift that is occurring before their eyes. The Wintel group continues to gain strength, from the BOTTOM up (e.g. the consumer pull). Wall St. still believes in the TOP DOWN approach, pioneered by IBM, which is to try to dominate sales to the IS groups.
The lack of any positive reaction to Merced and the DSL announcement today is further proof of ignoring events which do not fit with their preconceived notions of reality.
I have taken advantage of this situation by buying more Intel and CPQ.
and expect to be rewarded sometime this year.
HL |
