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

To: Robert Scott Diver who wrote (4232)	11/11/1998 11:27:00 AM
From: Ginco	Read Replies (2) \| Respond to of 8218

Now it seems that the top executives at IBM are negative,JMHO.

To: Robert Scott Diver who wrote (4232)	11/11/1998 11:52:00 AM
From: Arrow Hd.	Read Replies (1) \| Respond to of 8218

Scott, if you will allow me to take a bit different twist to this I would like to make some points again I made in post # 4140 to JR. This is the post where I called for 160 to 170 by next year with a split and a small dividend increase. That is still my opinion so I am not a bear. That said, I also raised concern that Gerstner used the Maria interview on CNBC to make his "due diligence" warnings. He waited until the second day but he warned on Y2K and the 2H99. He, and every other IBM General Manager have said to those who will listen that the next three quarters are absolutely critical. I have called for a "revenue bubble" in the 1H99 due to the need to move business forward from a hardware/software standpoint prior to the data center stall. Compared to 1H98 this will be a terrifically positive comparison allowing for more upside and the split/dividend increase. But, as I posted, it is very questionable whether the 2H99 can beat the 2H98. The issue here is will anyone care and/or will they already be looking past the Y2K issue. I think the Y2K issue is more than a blip. A blip is some slippage, somewhere, in a singular quarter. We are looking at the potential of a unique disruption to the IT business for potentially three to four quarters going into the summer of 2000. After that, there will be another IT explosion and you will want to own all the technology you can own. Again, the question is when will the street really start to understand this and will they even care. Milunovich spins like a top. Raises his estimate and then hedges when this WSJ article comes out (I dont find the Journal to be biased myself). If he was wearing a hat he would have rim burn. Anyway, if none of this makes sense to anyone then let me offer one other thought. The IBM revenue/profit model has been changed for 1999 in the first time in my life that I have been interested in that subject. Its always a slow first half with 40% to 45% of the business coming in during that period (this was measured two ways: raw numbers against target and then as "seasonal" performance) with the remainder coming in the second half especially the fourth quarter. In 1999 the model is 60% first half and 40% second half. So if you were an insider, an executive with strategic responsibilities, do want to be selling very large chunks next year maybe late in the second quarter or do you want to initiate a plan to "diversify" starting now so it looks to be a managed diversification strategy well ahead of the problematic issues. Gerstner told Maria the story but no one wanted to listen. He said double digit growth but dont change your models just yet. Milunovich, it appears, is calling for growth in the high teens (I didnt do the math so someone can correct me). My point here in all this is that there is probably more upside early next year but then it will be critical to not fall in love. It will be critical to assess the remainder of the year and to adjust as necessary on a quantitative basis. That is what the IBM executives just did. They were just a little early for strategic planning reasons.