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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Knight who wrote (113586)	7/19/2001 7:36:23 PM
From: Dr. Jeff	Read Replies (1) \| Respond to of 436258

<<<<You mention SEBL as a good example of candor. I agree that candor in a conference call is good (and refreshing!). SEBL is one of my long-term holdings (earmarked for kids' college) and I respect their management and appreciate their candor--even when it generates a short-term hit to the stock price like it did today. As an investor (rather than a trader) in their stock such candor gives me more confidence in their management. >>> SEBL still selling at 10 times sales and has a 100+ PE even after this "short term hit" you mention. Geez! I sure hope your kid isn't born yet with SEBL in his college fund. Have you noticed the INCREDIBLE amount of insider selling there? biz.yahoo.com

To: Knight who wrote (113586)	7/19/2001 7:50:17 PM
From: patron_anejo_por_favor	Respond to of 436258

Knight...I'll give you a full response later tonight, I'll have to get some links from my other 'puter.

To: Knight who wrote (113586)	7/23/2001 12:11:43 AM
From: patron_anejo_por_favor	Respond to of 436258

Hi, Knight...just picking up on our discussion of IBM. A couple of answers to your questions: 1)I'm assuming that in cases where IBM reported net income (or margins) in constant currency, they were also translating the relevant expense side to constant currency. Do you have any information that suggests otherwise? (Serious question, not being facetious.) In the conference call, I heard no references regarding expenses in constant currency, and multiple items regarding revenues in constant currency. The company-issued press release mirrors that asymmetry: biz.yahoo.com 2) Would you care to elaborate on how they've been dishonest in their accounting, etc. (or point me to posts, etc. that have this information). Thanks. IBM has attracted a lot of attention of the years from this thread and it's predecessor threads (All Clowns Must Be Destroyed and The Myth of the Big Kahuna. The main reasons it's intensely disliked center around accouning issues, and the ongoing tendency of the company to "rob" it's balance sheet in order to "make the number" (referring to EPS). The easiest way to look at this is with an overview of the 10-Q's, comparing 1996 to the results released on 07/18: sec.gov biz.yahoo.com For the sake of brevity, I'll cut to the pertinent lines: in 1995, long term debt was 10.1 billion, shareholder's equity was 22.4 billion and the debt/equity ration was 0.45 (which seems pretty reasonable for a company of its size at an early point in the cycle). As of 6/30/01, LT debt was 18.3 billion, equity was 20.5 billion, and debt/equity was 0.815. Thus, throughout the entire 6 year tech boom, IBM managed to squander a whopping 2 billion of shareholder's equity, while increasing their LT debt by 80%!! During this period their stock went from a split adjusted 22.84 to 113.50. Part of the stock rise was supported by managements consistent stock buybacks, and examination of the debt suggests that the money was at least partly provided by debt expansion (despite the boom times, and lately even in the face of deteriorating business prospects). There are other balance sheet issues, for example the move by the company away from a defined benefit plan to a defined compensation plan, allowing them to tap their overfunded pensions in order to make their earnings look better. Was it wise to keep expanding the debt and shrinking equity even as the economy was peaking and starting to falter (indeed, even as lending costs rose through the tightening in ST rates of '99 and '00)? Why all the deception, you may wonder? The obvious reason lies here: biz.yahoo.com IBM corporate insiders have been dumping stock at a rate that can only be described as "staggering". Again, in spite of their proclamations that business is great, etc (if you can find it archived, listen to the April conference call when they steadfastly denied that business in their services sides showed any signs of weakening, despite overwhelming evidence to the contrary w/respect to their competitors). Clearly the insiders were not "eating their own cooking". And this is not new with the company, it's been going on for years. A final telling point is stock sales by none other than the CEO and Chairman of IBM, Mr. Louis Gerstner himself: biz.yahoo.com To save you the work of tallying all this, his Lou-Ness sold $59,900,000 million in IBM stock in Y2K and over $72,000,000 so far this year (plus another $3,000,000 in gifts). Obviously, supporting the stock price in the short run BY ANY MEANS NECESSARY makes a lot of sense when you're planning a dump of this magnitude!! So if we seem a little "sensitive" by IBM trying to massage its numbers more forcefully than most, we have our reasons! Regards Patron