Wow! How far can this stock go?
I love IBM's prospects and think they are a great company, but really, isn't the stock price getting into the stratosphere? It is now at a PE of 27:1, and a Price/Sales of 2:1. As has been so eloquently pointed out by those who questioned the price, does IBM's performance deserve this? On flat revenues and in the face of uncertain Global economics, the price seems pretty rich. But what do I know, I keep having to buy back my covered calls at a loss! 4th Qtr looks very, very good. But, anything less than "exceeds estimates" probably will tank the stock.
Comments, opinions?
Lots of buzz within IBM about a retirement buyout and another offer to "bridge" employees to retirement (i.e. "cut head count"). Anybody heard this? The pension plan is over funded by about $6.3 billion. Hardly small change even for "big blue". If they buy out the pension obligations, what happens to the excess?
As far as IBM getting out of the RISC and UNIX market? No way! They need to compete and win in this market to remain a viable IS company. It is sort of like the PC market, even though it may not be that profitable, you have to be there to retain "mind share". Anybody remember a guy named Ken Olson and a company called DEC?
Anyway, I need to go warm up my cold feet. Best of luck to all of you IBM bulls, I am sort of a calf at this point!
Long and very, VERY nervous,
Jim Koch |
