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

To: Robert Scott Diver who wrote (1912)	11/27/1997 6:08:00 PM
From: yard_man	Read Replies (1) \| Respond to of 8218

Thinking that IBM's PE will approach that of the ave of S&P or even other computer makers is silly. Answer the question about margins and we can have a discussion. Otherwise, I'll just leave you all alone. I didn't come here to rain on your party -- just responded to a comment by Mohan. If earnings are accelerating as a % of revenues there would be a good reason to expect that the multiple of IBMs stock would expand. I see several reaons why it will shrink in the future. Where is IBM's PE, historically speaking? I wish you well, but honestly I think it would be foolish to go long at these levels. Perhapss you bought IBM a few years or even a year ago and are sitting on some good gains. If so, congratulations. If you made a recent purchase, last 100 days or so, good luck.

To: Robert Scott Diver who wrote (1912)	11/27/1997 11:40:00 PM
From: Greg Jung	Read Replies (1) \| Respond to of 8218

Robert, the case against IBM current price is well known. If you were paying at a Price/Sales ratio of 1, the 7% net margin after-tax earnings makes it like a 7% industrial bond. There is little or no discernable $ growth in sales, and the only prospect is the services portion. But the price increases, earnings increase, and PE stays the same. How's that? Share buyback and increased debt load. Maybe they've managed to convert $20b in debt to pre-crash Malaysian currency, in which case you deserve a windfall bonanza. Buyback is represented only in the form of increased debt (or decreased cash). There is a table you can use in post 1815 where I've tabulated items since its been in the black. What do simple ratios such as earnings/share mean in the face of the financial wizards at IBM? Last quarter they were able to engineer a reduction in income tax to 31% from the previous Q's 35%. With offices around the world this is possible by simply re-categorizing the payment flows, I suppose. Perhaps Ireland had another special this summer? I don't subscribe to any substantial "bear" case for global meltdown but I've sought justification on this thread, to no avail, as to why IBM is named a "value" stock. Maybe you can take a shot at it? Any other answer has boiled down to "well the price keeps rising, so it must be good". Greg