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

To: art slott who wrote (2691)	3/26/1998 4:57:00 AM
From: Toby	Read Replies (1) \| Respond to of 8218

Those speculating on IBM's results this quarter should be heartened by IBM's annual report. Nobody on this thread has commented on the large number of shares placed by the company "in trust" to meet future pension obligations, etc. My take on this is that the company is deferring earnings, and in fact the accounting gymnastics they used allowed them to remove twice the equity from their balance sheet as the shares represent. This permitted them to claim a 25+% return on stockholder's equity, which actually increases both when earnings rise and equity falls (talk about putting a spin on negative ROE!). Since the shares in trust aren't already committed to an outstanding obligation, IBM has the freedom in the future to use them to augment its pension fund instead of removing cash or stocks from the balance sheet. Personally, if a company believes that they can defer some earnings, and still make their quarter as they did in the 4th, I have confidence in the future, as they must too.