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

To: Charles Tutt who wrote (7384)	10/18/2001 12:35:58 PM
From: Arrow Hd.	Read Replies (2) \| Respond to of 8218

tyi Charles, my take is that the share buy-back is funded by free cash flow and the debt issue is related to the IBM Credit Corp funding of lease operations. There could be a pop in this debt number since the later part of September saw a huge jump in mainframe MIPs being purchased for back-up and emergency operations. There was an enormous spike in customers turning on spare engines after 9/11. Most of these machines are leased by customers through ICC and when additional capacity within the machine (engines, memory, channels, etc.) is purchased ICC executes a modification to the existing lease adding this capacity to the leased configuration. ICC needs to borrow the additional capital since the transaction is recorded as a purchase from IBM and a subsequent lease from ICC (with ICC paying IBM the dollars). The Fleckenstein article was interesting reading but this message has been offered every quarter for the past number of years. Actually our own Jules Garfunkle offered these points well before the pundits jumped on board. The stock price has never followed the message though so it is hard to trade off of this data. OTOH, it will be nearly impossible to reach the analyst's targets until we emerge from the current economic conditions and the uncertainty of this new war on terrorism. All IMHO of course.