Hi SB,
I'm sorry, but I must be really dense. I just don't get your point.
If IBM borrows someone else's money at, say, 5% and then makes loans to its customers at 12% in order to make sure that they can buy IBM's products with a, say, 30% mark-up, what is the downside? The customers are paying the principle AND the interest of the loan AND IBM recovers its manufacturing/development costs AND gets 30% profit while ensuring that the customer gets a streamlined loan process without bringing in a third-party to the transaction. This is exactly the concept behind GE Capital and frankly, EVERY lending institution (Credit Unions, Banks, Savings and Loans, mortgage companies, etc.). This frees up cash that IBM generates each year to be used in other ways, IF IT SO CHOOSES. I think this demonstrates that IBM is a very prudent money-manager in this area. So, what am I missing?
--Rob |
