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To: Alias Shrugged who wrote (173792)	6/19/2002 9:10:30 AM
From: ild	Read Replies (1) \| Respond to of 436258

Mike, with Louis Gerstner gone it would be prudent to do housecleaning that could be still blamed on him. If they wait too much it is going to be blamed on the new guy. Also, IMO it depends on what other companies do. IBM can't be left alone with 10% assumption rate if all other companies have 8%. Is there current tendency to adjust assumption rate? I know that Warren Buffet has something around 6%. Did you consider what IBM's liability going to be if they adjust assumption rate?

To: Alias Shrugged who wrote (173792)	6/19/2002 11:54:40 AM
From: reaper	Read Replies (1) \| Respond to of 436258

<<Don't expect IBM's pension income to drop very quickly going forward >> while their pension "income" may not drop, that "income" is an accounting fiction as you are well aware (and point out) and has nothing to do with CASH FLOW at the business. IF IBM has to actually start contributing CASH to shore up the pension fund (my best guess is that that day is +/- a year away if markets stay broadly flat) that's going to take a big bite out of their business. IBM has a ton of debt (and as Earlie points out, much of it is backed by leased equipment of dubious residual value) and also has supported its stock over the year via massive buybacks. This debt and buybacks require CASH to service, not accounting "income". So even if IBM is still spouting the ridiculousness of their 10% return assumption, that won't change the fact that they won't have as much cash as they used to, and that will take the stock down as investors begin to figure that out. Cheers