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Technology Stocks : IBM -- Ignore unavailable to you. Want to Upgrade?

To: WebDrone who wrote (5791)	10/22/1999 8:49:00 AM
From: Dorine Essey	Read Replies (1) \| Respond to of 8218

Looks like they warned about taking profits when the INSIDERS sold. Dorine INTERNATIONAL BUSINESS MACHINES (IBM: $134.75)# 07/20/1999 Solid Quarter; Time to Take Profits Earnings Per Share Old New P/E Ratios (FY:Dec.) 2000E $4.40 $ 30.6 1999E 3.65 3.70 36.4 1998A 3.30 40.8 Rating: MARKET PERF. Change: None 12-Mo. Target: $155 IBM posted solid Q2 results with both sales and earnings slightly above consensus forecasts. The only negative in the quarter was an unexpected revenue decline in the AS400 server line. A sales realignment and poor European shipments contributed to the AS400 revenue shortfall. Servers (ex the AS400), PCs, Services and Software posted strong results. We are fine tuning our FY99 earnings estimates upward by a $.05 but are leaving our FY00 earnings estimate of $4.40 unchanged. Despite the slight earnings beat, we believe IBM's stock will come under profit taking pressure for the following reasons: The stock is trading around 30x 2000 EPS and 2.5x the company's earnings growth rate. Earnings estimates should not change much following Q2 results. H2 revenue and earnings comparisons become much more difficult. PC shipments will have to compare against H298 channel restocking and mainframe shipments against Q398 G5 mainframe ramp. Q2's unexpected double digit AS400 revenue decline highlights the fact that hardware revenues lack predictability and IBM still generates over 40% of revenues from hardware. Consensus Q4 earnings estimates assume 50% sequential growth from Q3, similar to last year's sequential rise. While IBM has not seen any fall off in customer orders related to Y2K, the company still says uncertainties remain. For Definitions of Ratings and Terms, Click Here. For information regarding DLJ and the companies referenced within this report, Click Here