Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Robert Scott Diver who wrote (2081)	1/8/1998 6:35:00 AM
From: Toby	Read Replies (1) \| Respond to of 8218

re: IBM floated another $700M 30 year debt at 6.7% yesterday. It's good business if the stock goes up more than 30% a year... === I agree with you completely. I trust that management knows its future prospects and can gauge if it is wise to borrow money to repurchase stock. The trust is based on Gerstner's record thusfar, since there is no tangible evidence that IBM's growth will take off anytime soon. IBM has a good board and Gerstner isn't dumping his options, and has signed on for 5 more years, all indications that management ins't artificially inflating eps at the expense of long term interests. A short term management could artificially inflate eps in a pyramid scheme by borrowing money to buy back stock. When debt service eventually outruns the differential eps improvement of lower share count, the scheme collapses. I'm therefore not looking to buy companies whose shareholder equity is shrinking, but am nervously accepting this approach by IBM. In a nutshell, if IBM brass thinks the stock is going up, then I'm holding.