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

To: Don Hurst who wrote (2385)	2/3/1998 12:11:00 AM
From: Jules B. Garfunkel	Read Replies (2) \| Respond to of 8219

Hello Don, Your, "Jules, I like the BW comment about IBM's service business "ballooning from 2 billion to 19 billion in 7 years" . That is one and half MSFTs in just 7 years. Not bad growth for a no growth company, don't you think?" Well Don this is the "Crux" of the difference between you and me, Isn't it? Yes, IBM's "services business" is ballooning, as you say. However, if revenues over the last 2 years are relatively flat, as Earlie posted the other day, Reply # 2370, then by definition revenues from the rest of IBM's products must be down. Now understand this very important point Don, and the rest of you "IBM Bulls", IBM's Services Div. has gross profit margins of 23 %. The reduced revenues from the Software and Hardware Divs., for which Services Div. is compensating for, were at 72 and 68% respectively. Therefore, the only way that IBM can make up for these lower profit margins is to continue to buy back their stock, or hope that they can continue to have write offs and lower tax rates. Each of the later accounting tricks can NOT go on indefinitely. I have been saying this for a year now. I continue to wait for other investors to realize this very obvious analysis of IBM's earnings. Lately, I perceive, more and more investors are realizing the fact of IBM's poor quality of earnings. In my opinion, this is why technical analysts are calling for a downturn in IBM's price. Jules