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: Mark Brophy who wrote (3028)	5/3/1998 2:58:00 PM
From: J R KARY	Respond to of 8218

Mark what valuation effect do see if IBM does "acquisition by stock" ? " Revenues and earnings haven't grown very much, so the company could use the cash better by making acquisitions. " Assuming a purchase of an entire operation where IBM does not have a strong market position , and wherein the "value-add" of the combination produces immediate additional sales/profits . Assuming no DOJ objections , a stock exchange , and further commitment by IBM to use its excess cash to fund expansion . The effect on IBM's stock ? Thanks, Jim K.

To: Mark Brophy who wrote (3028)	5/3/1998 3:48:00 PM
From: Toby	Read Replies (1) \| Respond to of 8218

Every share IBM has repurchased until now has been a good investment on behalf of the shareholders. Who's to say that the stock is no longer a good investment? Share repurchases are a sign by management that they believe that the company's prospects are good. Responsible management would only deploy shareholders' money responsibly. Had IBM not been repurchasing shares, they'd have missed quarters and have had disappointing EPS growth, and we'd all be a lot worse off, instead of enjoying a steady multiple expansion based on the company's predictability of earnings and increasing popularity as an investment. I prefer to believe that IBM has excellent management who can continue to grow profits, and begin to grow revenue no that the company is on the verge of firing on all cylinders. Now that services are an increasingly important part of the revenue equation, and mainframe servers less, IBM is positioned to pick up revenue growth. In the past, realigning the businesses took priority. The bottom line for me is that Lou Gerstner has worked wonders in his first five years. He could be the next Jack Welch by the time he retires. I'm not going to miss out, or second guess his moves at this time by selling. There are too few good stocks to toss this one overboard in the belief that I know better than proven mgmt. how to deploy the company's cash flow.

To: Mark Brophy who wrote (3028)	5/4/1998 11:40:00 AM
From: Arrow Hd.	Read Replies (1) \| Respond to of 8218

Regarding the issue of acquisitions, this is not always a clear picture. Obviously Lotus sticks out but IBM makes many small acquisitions where they buy a piece of a company every year. They will often include a clause in an OEM deal where they reserve the right to buy 5% of the company. This was mentioned either here or on the Xylan thread a while back regarding IBM's buying Xylan networking products. So I believe there is an extensive portfolio of investments in technology companies on a world-wide basis that accrues a multitude of benefit. But since they are not total acquistions they never make the news. With the rise in market value of many of these companies in the portfolio it also assists the bottom line when they sell off their holdings. Selling off holdings can also be done for many reasons and it would not necessarily show up anywhere. Depends probably on how much they own and the country of transaction. Anyway, it is my belief these are cash deals and when added up can be more significant then we believe.