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

To: Rob Bowerman who wrote (4130)	10/26/1998 10:18:00 AM
From: Skeeter Bug	Read Replies (2) \| Respond to of 8218

the downside is they lost 5% of the return, and the opportunity to shed much, much, much of their current risk, in order to finance the stock buyback. isn't this obvious? the argument is that the money was better spent buying stock. i don't disagree. i can't disagree b/c it is a fact. until now. the future is what is in question here. my ONLY point is that if ibm's stock takes a nice haircut - say to a pe of 12 (50% of current value) - then ibm has some trouble. lots of 7% growers wish they had a 12 pe. at least historically. i'm not a new era type. those that bought the nikkei at 39k wish they weren't ;-) anyway, if this plays out then... 1. ibm invested horribly. 2. employees will want cash and not stock options thereby reducing earnings by increasing employee compensation that runs through the earnings statement - all else being equal. that is all i'm saying. maybe ibm stops buying shares, ibm goes to $200 and falls to $160 at some point. it could happen. i just don't think it is likely. if ibm takes a big fall - which is in no way unprecedented - then ibm made some major blunders. i'm not guaranteeing it will happen. i do, however, believe ibm is overvalued and will fall to more realistic pe ratios.