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

To: J R KARY who wrote (4521)	1/22/1999 11:45:00 AM
From: Ibexx	Respond to of 8218

Kary, You were absolute correct about the successful transition IBM made in its business model. I added to my position this morning at $183. Regards, Ibexx

To: J R KARY who wrote (4521)	1/22/1999 11:56:00 AM
From: art slott	Read Replies (2) \| Respond to of 8218

Jim, I'm a buyer. I think this is a support area and I expect IBM to be up Monday on anticipation regarding the Board meeting. Buying when some blood spills from IBM has worked well. Art

To: J R KARY who wrote (4521)	1/22/1999 1:05:00 PM
From: Arrow Hd.	Read Replies (2) \| Respond to of 8218

Just a few observations to share with the thread. IBM made a horrible tactical error earlier this week by leaking to CNBC that there was going to be an upside surprise. The concensus was 2.44, the whisper was at 2.46 and I had a guess on the table at 2.47. When I heard "upside surprise" I immediately thought in terms of a minimum of 2.50 to maybe 2.55. 2.47 disappointed me even though it hit my target. 2.47 is not an upside surprise and the street was taken aback by this misguidance. I had 9% revenue growth. 6% is a disappointment though Gerstner told the street earlier last year not to change your models for 1998 from single digit growth. His double digit growth was for 1999 and out. There is confusion about revenue equaling demand. The demand for mainframes was 60% more than 4Q 97. That is significant since it drives services, software and maintenance revenues. Demand is up and will grow rapidly as measured in MIPs. Revenue was down due to discounting hardware, in particular, when it was in a major bottom line bid. Morgan Stanley had this hardware methodology backwards. IBM may have had the numbers to post 2.50 but maybe decided to increase their contingency debit agaist shipped and uninstalled equipment reversals. If the equipment does in fact install (which invariably it does) then the debit is reversed in the first quarter. As I have posted in the past, the business model for the first half is 60% not 40% and I have given examples of action plans to attain those numbers. We have discussed the second half Y2K data center freezes and its affect primarily on the 4th quarter. This is real and will affect business sectors within the portfolio. But there are strategies developed years ago to deal with this. For instance, in the mainframe transition from bi-polar to CMOS IBM changed their upgrade strategy from physically adding engine sets when a customer upgrades to a new concept of having all of the engines within a module (multi chip module) and these engines are turned on with microcode and by this summer that upgrade will be "concurrent" which means the system does not need to be powered down. So in the fourth quarter when customers freeze their data center but all of the sudden need engine capacity or in some cases memory capacity increases all that is required is for a load of microcode to be downloaded via electronic link on a machine to machine basis adding the asset protected code that turns on idle engines to provide MIPs to the customer, all non-disruptive. Kind of neat, right. Also an exclusive. So, they are not asleep at the switch. Could things be better? Of course they could but IBM is positioned as well as any IT company in the industry and it is tough to bet against them.