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Technology Stocks : Phoenix Technologies (PTEC)
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To: Jules B. Garfunkel who wrote (2864)10/25/1998 7:08:00 PM
From: Fred Fahmy  Read Replies (1) of 3624
 
Jules,

<IBM has been asking for, and getting, higher P/E ratios assigned to their stock price. Obviously I am missing something, or the other analysts are missing something..... But What??? >

I think IBM is trading purely on emotion rather than on in depth analysis. Before IBM's downfall in the mid to late 80's it was a perennial favorite on WS. WS was looking for any sign that things were improving to jump back on the band wagon. Lou has done a lot to get the numbers looking better, but I think we both agree that much has been done with smoke and mirrors. Regardless, IBM's has been sufficient to make WS drool. But, make no mistake about it, IBM is NOT the same powerhouse it was before Akers brought it down. IBM's P/E makes no more sense than KO's or MCD's or many other "blue chips". IMO, IBM and these other "blue chips" are what define a market still full of excesses. To be sure, IBM's performance hasn't been a "disaster" but it surely hasn't been stellar and has hardly been impressive enough to receive the kind of reaction it has on WS.

Just like WS always views some companies with a bit of skepticism (e.g. INTC) it has its favorites like IBM. As long as IBM shows any results which are flat or better, the Street will find a way to rationalize its hefty valuation.

My 2 cents,

FF
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