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

To: Arrow Hd. who wrote (5036)	4/22/1999 9:12:00 PM
From: Jim Koch	Respond to of 8218

Arrow, thanks for your thoughtful analysis. You are right when you say it is difficult to relate actual bottom line results to what the marketing force is saying. I listen to reps that are crying like hell because they are not making quota, and then when you dig deeper, their quotas have been so dramatically increased that if they are just making "plan", IBM will kill it. Perhaps I give the professional investment community too much credit. For those of us in the trenches every day, we may have a better view of the future than they do. When I talked to IBM Sales Reps, Brand Managers, Opportunity Business Managers, and others, I begin to see a picture of very strong revenues. I have no idea how that would translate into EPS, since there is so much that can contribute to that number. However, I did see one very clear trend...IBM was selling stuff! That is why I took a flyer and went long. To pad my ego, I attribute it to superior analysis. Truth of the matter, as my Daddy would say, "You got lucky son"! Jules has done an excellent job of stating why he feels IBM is over valued. In fact, he is correct if you just look at the numbers. However, let me interpret his correct facts differently. When LVG took over IBM, they were in very, very deep trouble. The first order of business was to stop the bleeding, return the company to profitability, restore investor confidence, and most of all, restore employee morale. He has done that. The old saying is that is difficult to turn a battleship around, but once you do, get out of its way. IBM was a battleship dead in the water. Gerstner got it going again and turned it around. It took time, but for a company of this size, the turn around is nothing more than amazing. They have completed that phase, and are well positioned to lead the IT industry into the 21st Century. That is why they deserve a high PE and the current stock runup. Now, the big question is, can they repeat in Qtr 2? I say they will, but now that expectations are so high, what does that bode for the stock price. Good topic for discussion on the thread. Comments?