# International Business Machines Corp. (IBM)



## donald (Apr 18, 2011)

What do you think of ibm?ive been looking @ this stock,it almost seems perfect,great div,yield,im wondering if its currently overpriced?seems like its alot more insulated compared to the other techs,they also just celebrated 100 yrs of business yesterday,anybody own it?


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## KaeJS (Sep 28, 2010)

A guy I used to work with swore by IBM. He recommended it to me at $162, and I didn't buy it.

Would I buy it now? Probably not.

I dont think the yield is that great, its only 1.75% and buying it around $171 is pretty damn expensive if you ask me...

But its up to you. 
Obviously a great company, I just rather pick something else.


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## Abha (Jun 26, 2011)

I definitely think IBM has another $10 to go but I also think there's better opportunities elsewhere


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## HaroldCrump (Jun 10, 2009)

It's a *very* good company.
Which probably means it isn't a great stock, at least not right now 

They are very well diversified, have their fingers into pretty much everything related to technology under the Sun (no pun intended).
Time to buy this would have been the dot com bust days of 2002.
But even then you would have made out with only about 10% annualized, including dividends.

I don't see how they can fuel any substantial growth unless they buy out one of the other three large competitors like Micro$oft, Oracle, SAP or one of the technology consulting giants like Accenture or the offshore technology plays like Infosys.

IOW, a stable solid company for capital preservation but not for significant growth or income.


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## m3s (Apr 3, 2010)

IBM, the guys who laughed at the idea of "personal computers"? Solid stock but not much growth with visions like that


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## Sampson (Apr 3, 2009)

HaroldCrump said:


> But even then you would have made out with only about 10% annualized, including dividends.


You make this sound like a bad thing.


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## HaroldCrump (Jun 10, 2009)

Sorry, you are right, it's not.
What I was trying to say is that (IMHO) a large part of the growth in this stock is now behind us.
I don't think this stock can make 10% every year moving forward.


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## kcowan (Jul 1, 2010)

Since it recent low in Novenber 2008 at $74.88 it has returned 2% dividend and 4%/mo capital appreciation so it has been a good hold. But going forward, it is hard to imagine a repeat of such outstanding performance. This are all USD figures so the Cdn return will be less. They have been borrowing corporate bonds at 1% interest so for sure the dividend is safe.

Will such growth continue? Not likely. Current trajectory is about 2.7%/mo capital gain. 

(I hold IBM in my portfolio as a hedge against another tech meltdown.)


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## Abha (Jun 26, 2011)

I think people are seriously underestimating the level of innovation that IBM has within its divisions.

While its not a multi-bagger this is a core holding for sure and like another poster said, a terrific hedge stock.

This can easily gain 10 - 20% in a good economy.


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## Sampson (Apr 3, 2009)

kcowan said:


> Since it recent low in Novenber 2008 at $74.88 it has returned 2% dividend and 4%/mo capital appreciation so it has been a good hold. But going forward, it is hard to imagine a repeat of such outstanding performance. ...
> 
> Will such growth continue? Not likely. Current trajectory is about 2.7%/mo capital gain.


By this logic, nothing is worth it since what is the likelihood any stock maintain the rate of appreciation since they bottomed out?


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## Abha (Jun 26, 2011)

This may be weird but I'm taking the somewhat negative sentiment about IBM as a bullish indicator. 

The sample is very small but the fact that we (myself included) are ganging up on this stock makes me think this is one of those great contrarian plays.


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## donald (Apr 18, 2011)

Ibm has poped.friday it raised 3 dollars a share.i bought friday mourning as a core(foundation stock)i dont expect it to be a big growth,but there is a lot to like of big blue....the street is very bullish on it,and its got global reach,I like the company i think they are a better long than msft,but time will tell.everything this week is up so its murky to see whats the real goods.


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## kcowan (Jul 1, 2010)

Sampson said:


> By this logic, nothing is worth it since what is the likelihood any stock maintain the rate of appreciation since they bottomed out?


Well if it attained 1%/mo capital gains, would you be ok with it?

I am saying that 2.7%/mo is unlikely over an extended period. Even though that is its current performance.


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## Sampson (Apr 3, 2009)

It isn't whether I'm ok with X% rate of growth, but the logic that a stock cannot maintain a certain rate of appreciate because the slope is 'too steep' has neither foundation in fundamental nor technical analysis.

I agree that the stock price will not continue on this tragectory, but only because the companies future earnings seem to be priced in, and there is nothing the company is doing that suggests people will pay a higher premium on the stock in the near term.


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## kcowan (Jul 1, 2010)

Sampson said:


> I agree that the stock price will not continue on this tragectory, but only because the companies future earnings seem to be priced in, and there is nothing the company is doing that suggests people will pay a higher premium on the stock in the near term.


Agreed! What is ironic to me is that IBM has been doing this all year and Apple has been going nowhere. Talk about results being priced in!


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## Abha (Jun 26, 2011)

kcowan said:


> Agreed! What is ironic to me is that IBM has been doing this all year and Apple has been going nowhere. Talk about results being priced in!


Give it another 5-6 months. Apple is setting up for a huge move


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## Sampson (Apr 3, 2009)

Expectations are always so high with Apple. I don't think they have much room to not be releasing stellar and show stopping new technologies all the time.


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## Abha (Jun 26, 2011)

This thread really got me curious about IBM so I was researching them briefly over the past few days and found this.

The technology looks very promising and hopefully they can monetize it in a way that benefits the stock. 

http://www.physorg.com/news/2011-06-ibm-scientists-memory-breakthrough.html


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## kcowan (Jul 1, 2010)

Yes but 2016 is the target for commercialization. Granted it is nice to have breakthroughs in the pipeline, but it will not affect the stock anytime soon. But is is encouraging for the long haul...


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## m3s (Apr 3, 2010)

So it's 100x faster than Flash, but I'm not convinced it will have a cosmic impact just yet. Some things that article failed to mention is cost, size, and thermal challenges. Nothing is setup to support 100x faster-than-Flash, so this is way down to road.

A huge benefit to SSD and Flash is how perfectly small/quiet/cool it runs compared to spinning disks or things that heat up and have to be cooled somehow. SSD and flash is probably still a better setup for anything portable and it has the major benefit of not needing noisy costly space hogging fans to cool them, and SSD/Flash doesn't vibrate or heat up.

That tech might be better for certain applications such as cloud, servers, military, space who knows what. Just because something is faster doesn't mean the rest of the cloud or system etc can keep up. It's still innovation non the less but but other "non-giants" are cashing in huge on the SSD/Flash which has already gone commercial years ago.


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## donald (Apr 18, 2011)

Im glad i bought ibm,its been hot,last week and a half,i wanted to buy microsoft,but decided on ibm..so far so good.leading tech stocks,there 100 yr anniversary was a big reason i bought shares thou,soild,old,and as they call it the "big blue".


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## donald (Apr 18, 2011)

Hello...lol,pride comes before the fall but ibm is rocking after today,the old stalwart is running.anybody like ibm right now,anybodys watchlist?and whats with priceline stock today?ive been watching that stock it had a massive run up today.good day for the bulls.


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## kcowan (Jul 1, 2010)

Palmisano said that $200 was his target for the stock. I think he might overshoot! Who knew?


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## donald (Apr 18, 2011)

Anybody have any thoughts on buffets lastest investment,he has a 5.5% stake now and has poured in over 10 billion on stock.

On anybodys watchlist?Signal alot of vaule @ its prices today.


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## jcgd (Oct 30, 2011)

I've always like the look of Big Blue. I'm would be willing to piggyback Buffet just for his record. If he's willing to bet 10 billion or 17% of his money on it, it's probably not a bad idea.


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## donald (Apr 18, 2011)

Although not a pure tech its still interesting buffets so heavy,since he shuns tech,he also bought more of wells fargo and cvs,read that gates up his berkshire stock last quater.

Buffets put alot of money to work lately,im wondering about berkshire b shares might be a play long.


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## jcgd (Oct 30, 2011)

I don't know about going long, only for the fact that he is getting up there. I wouldn't at all be surprised if he pushes 100, but when he does pass, I wonder what will happen to the stock?

I also personally wouldn't hold anything but common shares. I can't remember why, but I read something a few years back that changed my mind on B stock.

When you have to manage 60 billion, where the heck do you put all that money? I'm not sure how long the huge gains can last, only for the size of the portfolio. Unless you start buying developing countries or something. 

He must really believe in WFC cause he's been averaging down for a while now. He did make a good point that he got into railroads after many years, pretty much at all time highs. And IBM isn't your typical tech at all. It is huge and stable. He made a point that even changing an accountant, etc. is a huge deal that isn't taken lightly at IBM. That kind of style is what Buffet loves. Slow and steady. Eventually things change and even he admits that he it growing and changing the way he invests. He's been changing styles his whole career, if only slightly.


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## donald (Apr 18, 2011)

Ya,him and munger are up there!But they hand picked todd combs,You know without a shadow of doubt whoever is on warrens team is ethical,strong character,ect.Its safe to say he probably picks his team just like he picks his holdings and investment.(might be wrong but i think besides munger there is only 7 others on there team)


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## jcgd (Oct 30, 2011)

Oh, no doubt about it. But people are emotional, and when something happens to Buffet you never know what will happen to the stock. If it does drop, that is when I would buy it.


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## Argonaut (Dec 7, 2010)

IBM is the best tech stock, period. If only one could get it at 2% yield again..


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## kcowan (Jul 1, 2010)

I wonder if the new female CEO made a difference? Or them ratcheting back DB pensioner benefits.


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## sam (Mar 16, 2012)

IBM touched $199 this morning , what do you guys think ? I think 200 is not a bad price for this stock .


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## PMREdmonton (Apr 6, 2009)

sam said:


> IBM touched $199 this morning , what do you guys think ? I think 200 is not a bad price for this stock .


I think 180 is a better entry point.

Buffet buying in has put a lot of air under this stock and there are always concerns about earnings quality and they are stingy with dividends compared to share buybacks.

However, they are great in the business service area and have lots of recurring revenue so they should be strong into the future. It has just been too frothy for me lately.


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## SkyFall (Jun 19, 2012)

Bought it at $173 few months ago, didn't sell before financial reports, it was topping the $190 now pre-martket is at $181..... should I sell?


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## Video_Frank (Aug 2, 2013)

Someone on StockTwits says he/she buys IBM after every earnings report and sells before the next one. Claims they haven't lost money yet. What was your exit strategy when you bought in?

As an aside, DW has worked there since '89. She began buying stock on the EPP and it has worked our very nicely for us. We have no plans on selling yet. We're still riding the wave.


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## SkyFall (Jun 19, 2012)

Since I didn't pick up a lot of shares I was just trying to get in at lows and selling at highs (with a timeframe of maybe 1-3 years)


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## Video_Frank (Aug 2, 2013)

At $181 right now it's still above your entry point. I'm in long term so little bumps don't bother me much.


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## andrewf (Mar 1, 2010)

In terms of risk mitigation, it's not ideal to have a substantial portion of your net worth invested in their shares of your employer. Losing your job and poor returns are highly correlated.


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## Video_Frank (Aug 2, 2013)

Tell me about it. The stock has split twice since we started buying but we watched it drop to about $40.00 in 1993 (about $10.40 today). It had been about $140 two years earlier. I was freaking and the company was in "flux". My wife reminded me that if the company went under we would have bigger things to worry about than a few thousand dollars worth of stock. She also pointed out that as we were buying a fixed dollar amount every week that we were DCA'ing when the stocks were "cheap".

The company no longer offers discounted stock purchases so we discontinued purchases some time ago. We consider the stocks to be "outside" of our portfolio and we ignore it for the purposes of AA. Everything else is indexed as per CCP. It's less than 10% of our investable assets so a total loss would not devestate us.


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## andrewf (Mar 1, 2010)

Nothing wrong with taking advantage of discounted stock purchases. I just sell periodically and put it in my RRSP.


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## Video_Frank (Aug 2, 2013)

Our RRSPs and TFSAs are maxed out. If we sold we'd take a huge capital gain hit. We put them away as "rainy day" money but have never really needed them. If our income ever drops, perhaps if my wife gets let go, them we would sell when the capital gain wouldn't hurt too much. We've had many years of LBYM I guess.

At the time the shares were held by an American brokerage which charged $50.00 per transaction, which discouraged the practice you employ.


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## gibor365 (Apr 1, 2011)

Below $180....anyone is buying here? I like the stock, but don't like 2.1% yield


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## underemployedactor (Oct 22, 2011)

^They did a lot of share buy back in '13 (along with everyone else gorging on cheap money) but I imagine they will up the divvy this year to be more in line with others in the sector. Probably some down draft on the SP for the short term as well.


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## Uranium101 (Nov 18, 2011)

Anyone selling or buying IBM?
Aside from declining revenue, what other factors are you concerning?
Heck, if they reported 1 cent in revenue growth next quarter, the stock might just shoot up lol. Wall Street places too much emphasis on revenue growth.


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## Just a Guy (Mar 27, 2012)

http://www.cringely.com/2014/01/23/ibm-sells-intel-server-business-company-doomed/


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## NorthKC (Apr 1, 2013)

PC is a dying breed. It would be very hard for IBM to continue to grow so I don't see myself buying this stock.


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## andrewf (Mar 1, 2010)

IBM sold their PC division ages ago. This is about their intel server division. And servers are not going anywhere. The problem is that big web companies are bypassing server makers and making their own with relatively cheap, unreliable commodity hardware and making the magic happen in software. Google is the expert in this. Their whole infrastructure is toothpicks and bubblegum with great software holding it all together.


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## NorthKC (Apr 1, 2013)

Sorry, I'm getting IBM mixed up with something else.


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## donald (Apr 18, 2011)

Buffett(Berkshire)must see something right with IBM,he bought 10 billion worth or something like that(not long ago).
yeah I know one should never follow professionals into trades but I doubt he has plans to unwind it.
Esp the fact he chooses this tech co over everything else in the space.
why did he buy,if it's so bad?


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## Just a Guy (Mar 27, 2012)

If anyone is interested in a new book...

http://www.cringely.com/2014/06/04/decline-fall-ibm/


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## gibor365 (Apr 1, 2011)

IBM is underperforming index .. .looking at the chart, IBM has strong support at 173-174 level.... Do you think IBM is a good investment for long term?


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## HaroldCrump (Jun 10, 2009)

A new critical book out on IBM:










It appears to be well researched and analytical in nature.
The author claims that IBM is on slow but sure downward slide into irrelevance.

Some of the key criticisms are:
- Company is highly leveraged. Borrowing records amount of money for share buybacks, instead of organic business growth
- Cloud strategy is broken. Just putting up servers does not qualify as "doing cloud"
- Not focusing enough on mainframe business, which can still be made high margin
- Top layer management has become fatcats awarding themselves huge bonuses, linked to quarterly EPS results instead of real growth
- Company culture is badly broken. Employees feel unappreciated and unrewarded. Many haven't received raises or promotions for years
- Services business is becoming commoditized. Competing in a race-to-the-bottom market with offshoring companies


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## fatcat (Nov 11, 2009)

HaroldCrump said:


> - Top layer management has become fatcats awarding themselves huge bonuses, linked to quarterly EPS results instead of real growth


hmmm, strange because i told them specifically to give my bonus to the little people ... very odd ... oh well, i think i'll buy myself a nice shirt made out of gold 

View attachment 1449


buffet has 12.44% of his portfolio in ibm and recently added more ...


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## cashinstinct (Apr 4, 2009)

IBM stock on sale this morning, around $168-170
http://finance.yahoo.com/q?s=IBM&ql=1

I read that Buffett owns a lot, and other value investors too.

The short-term loss they announced on Q3, is it worth such a loss this morning?


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## Just a Guy (Mar 27, 2012)

If you've read any of Robert cringley's blog or the book he made from it, you'd realize it's not the "miss" that has people worried, it's the lower future guidance that may be an issue...

Personally, I'm not sure what I'm does anymore...they sold off their computer manufacturing, their "services" company seems to be floundering and for sale...

If I don't understand stuff, I generally don't buy it, no matter what the price. When they made stuff, or provided a service, I could at least evaluate how effective they were with it...now they seem, like Microsoft, to be in a slow spiral to oblivion.


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## bmoney (Jun 22, 2013)

Personally I would stay away from IBM, I think it's a value trap. For that matter, investing in tech companies long term is generally a risky proposition, why choose one with such dim prospects. More and more B2B services are being delivered through the cloud, with less need to own and maintain network infastructure. This space is already crowded with Amazon, Google, Microsoft among many other players. IBM will have trouble finding and retaining top-talent, their perception is no longer cool, relevent or cutting edge. If you were a hot-shot twenty something in Silicone Valley with the next big idea, would you want to work for IBM? Probably not. There are better gambles than IBM.


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## Butters (Apr 20, 2012)

Buffet likes them because they do repairs and other tech services. Same reason why he likes used car dealerships. Half repairs half sell cars. 

IBM has been buying back shares thus allowing their to keep their dollar payout the same but increase the dividend on the fewer shares. 

They have been doing the right moves but now it could be catching up to them. 

Will be interesting to see if Buffet sells any.


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