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Technology Stocks : Compaq
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To: John Koligman who wrote (35302)10/24/1998 12:42:00 PM
From: JRI  Read Replies (1) of 97611
 
John- Thanks for your comments....It's clear that the market now rewards some companies' (like IBM) share prices with what I'll call a "flight to safety and/or liquidity" premium...as a component of the stock price (in addition to the discounted-future-earnings-stream component)

IBM's stock price has benefitted/benefits greatly from this premium...Will this stock price (and, accordingly premium) continue to expand at above 20% annually in the future...that given future growth will only accerlerate modestly, at best..Who knows? But an increase in this safety premium will probably be necessary for this to happen..

I am not comfortable owning IBM...Not enough upside (growth) potential, IMO (I am not comfortable investing with the hope that this safety premium will increase).......but it is clear that Gertsner has done a very good job on his watch...however, he has yet to prove he can grow IBM overall (not just the services component)at more than modest rates...I think only another company re-engineering could make it happen...Did you read Business Week's profile on IBM a couple weeks ago? Made some good points....

I agree with you that the services component of IBM business is very attractive...it's some of the other (mediocre) businesses that IBM seems unwilling/unable to change/diversify from that are a drag....
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