Words from a real corporate leader-
Gerstner(IBM CEO and Chmn), who addressed analysts in Manhattan late Wednesday, said that $20 billion in sales, or 25 percent of the company's total revenues, is Net related.
By comparison, the top 25 Internet companies, including America Online (AOL: news, msgs), Amazon.com (AMZN: news, msgs), Yahoo (YHOO: news, msgs), EBay (EBAY: news, msgs), and E-Trade (EGRP: news, msgs) generated $5 billion in total sales and lost a "cool" $1 billion, according to an internal survey, Gerstner said.
Yet the stock market value of the "Internet 25" is 50 percent bigger than IBM's $200 billion-plus market cap, he said.
Gerstner also pointed out that the top 25 Net companies had a price-to -trailing sales multiple of 60, whereas IBM's price-to-earnings multiple was half that, or 30-times. "Go figure," he said.
Following Gerstner's high-spirited speech, Steven Milunovich, analyst at Merrill Lynch, raised his price objective to $270 from $240, or 30-times his 2000 earnings estimate. "With 25 percent of revenues from e-business, IBM is becoming a quasi-Internet company," he said in a note to clients.
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Nothing quasi about it in my opinion. It's the real thing and EDS is really not far behind.... What a tremendous business opportunity .... there will be plenty of business for both IBM and EDS.
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