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

To: Charles Tutt who wrote (7516)	3/10/2002 6:47:27 PM
From: j g cordes	Read Replies (1) \| Respond to of 8218

I have no way of know that. It may be in the upcoming 10K.

To: Charles Tutt who wrote (7516)	3/11/2002 5:01:22 PM
From: Arrow Hd.	Read Replies (1) \| Respond to of 8218

"If debt is rising to finance customer purchases, but revenue is stagnant, does that mean more customers are financing a larger part of their purchases?" I am surprised that no one seems to want to agree that most of the debt is incurred to finance a leasing business that is profitable. You can't run an operation the size of IBM Global Financing without incurring debt. There are a lot of reasons the debt is rising. One, Hitachi and Amdahl are out of the mainframe business and the IBM mainframe business is roaring. Mainframes are invariably packaged with an IBM Global Financing offering that is accepted by the customer. Two, Comdisco went out of business and a dozen other lessors and fabricators left the business for various reasons such as the counterfeit memory litigation and the inability to maintain critical mass. And I do believe that more customers are using IBM Global Financing in general. So, yes, the IBM Global Financing business is doing well for a number of reasons. Further, IBM Global Financing is not financing the customer's business (the Enron example), it is financing via a capital or operating lease a hard asset that it has a lien against and whose liability is less than the very conservative residual value assumptions of the asset that is inherent in the lease. And how can IBM do that? Very simply when you know the next three year's product plan from a replacement standpoint and since the used asset base to which new product competes is predominantly IBM and whose residual value erosion is mitigated by IBM through its remarketing and leasing operations it is very reasonable to expect that IBM can manage lease financials such that the underlying asset's value exceeds the lease liability which protects IBM's financial exposure. Also, the entire Server line is upgradeable for generations so the underlying serial number never changes which means there is no lease termination or subsequent competitive bidding, simply a rollover of the IBM Global Financing Term/Lease Master Agreement. It is one of the reasons IBM is able to borrow as cheaply as it can. So the debt issue is bogus. Now if we want to talk revenue growth then that is a problem. Until that is fixed somehow none of the other issues goes away, bogus or not.