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Any IBM investors ?
Old 06-27-2020, 08:43 PM   #1
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Any IBM investors ?

About 25% off high.

I guess remains to be seen how relatively new CEO does, and how IBM does with cloud computing, etc.

But 5.5% dividend seems rather safe at approx 50% payout ratio.

Any thoughts on this one? Thanks
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Old 06-28-2020, 03:01 AM   #2
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As they have raised the dividend the payout ratio has gone way up. They have to spend a lot of their cash flow over next few years to pay for red hat (34b which they intend to pay off w their existing cash flow)
Zero organic growth for the last decade (any growth was acquisitions)
Their profit comes from two things. 1. Software maintenance streams (actually in decline). 2. Mainframe revenues (up and down cyclical).
They can no longer afford share buybacks which was the primary driver of eps growth.
Look at actual profit over last decade, not eps. Not good.

Value trap? Potential buyout or breakup if it declines much further ?
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Old 06-28-2020, 06:31 AM   #3
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....
They can no longer afford share buybacks which was the primary driver of eps growth.
Look at actual profit over last decade, not eps. Not good.

Value trap? Potential buyout or breakup if it declines much further ?
Wise words for any stock these days.
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Old 06-28-2020, 06:46 AM   #4
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Having a declining NAV for 10 years and a 50% payout is a reason to buy? Oh yes, the new CEO will fix things...
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Old 06-28-2020, 06:55 AM   #5
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CEO's historically take about 5 -10 years to "fix" things, and if they do, it's only 10% of the problems. The problems are usually structural and hard to change. Look at GE for an example.

Oh, the new CEO usually makes out well financially before it's his turn to exit.
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Old 06-28-2020, 07:21 AM   #6
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No. I've watched IBM floundering for the last 20+ years. The days of "buy blue you will never be wrong" for larger computing solutions have been over for a long time.

You mentioned cloud computing, when I retired 7 years ago they were attempting to do that. Looking at what other forward thinking organizations do in 7 years.
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Old 06-28-2020, 12:26 PM   #7
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Mid 80s the writing was on the wall. Just milking dying revenue streams and questionable growth through acquisitions and sales of whole divisions.
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Old 06-28-2020, 12:36 PM   #8
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I wouldn't even touch their bonds. IBM has been issuing a lot of debt to buy back shares which is not going to happen any longer. IBM and GE are kings of financial engineering. We all know what happened to GE and the worst is yet to come. Put it on your avoid list.
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Old 06-28-2020, 03:41 PM   #9
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I work in the field and used to be in charge of procurement. We stopped buying ibm years ago. IBM is tech trash unless you want as400 or mainframe. They bought red hat because they can no longer innovate. I hear they have a lot of cash (no idea if that’s true) but I agree with others here, look elsewhere. Cloud is azure or aws. Sure hope they don’t destroy RH like they did everyone else.
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Old 06-28-2020, 03:59 PM   #10
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Originally Posted by MichealKnight View Post
About 25% off high.

I guess remains to be seen how relatively new CEO does, and how IBM does with cloud computing, etc.

But 5.5% dividend seems rather safe at approx 50% payout ratio.

Any thoughts on this one? Thanks

Not a fan of IBM. New CEO might be better, but they have lost too much ground already IMHO. Looks like a dead man walking to me.

Unfortunately several ETFs I own like SCHD have shares in IBM. So I'm long the stock. The metrics probably look good on paper.
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Old 06-28-2020, 04:24 PM   #11
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I work in the field and used to be in charge of procurement. We stopped buying ibm years ago. IBM is tech trash unless you want as400 or mainframe. They bought red hat because they can no longer innovate. I hear they have a lot of cash (no idea if thatís true) but I agree with others here, look elsewhere. Cloud is azure or aws. Sure hope they donít destroy RH like they did everyone else.
There's not much competition in those markets. A few competitors in the mainframe and nobody on the as/400 (iSeries, system I for power... or whatever name today). I didn't think anyone bought an as/400 because they wanted one, likely a vended application required it.
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Old 06-28-2020, 04:59 PM   #12
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I think that IBM is just another company run into the ground by management pursuing short-term financial goals rather than investments that generate real innovation and profits. Similar to Boeing, GE, GM, Ford, etcetera.

This video is good.
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Old 06-28-2020, 05:08 PM   #13
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IBM doesn't even appear to have any value as an acquisition target since their technology is not keeping up with the trends. They will probably go the same route as Kodak.
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Old 06-28-2020, 07:36 PM   #14
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There's not much competition in those markets. A few competitors in the mainframe and nobody on the as/400 (iSeries, system I for power... or whatever name today). I didn't think anyone bought an as/400 because they wanted one, likely a vended application required it.
agree 100%... "banks".
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Old 06-28-2020, 09:08 PM   #15
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agree 100%... "banks".
+1

At one time it was attractive to be a reseller of the hardware. Big margins and IBM wouldn't undercut you, those days are long over.
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Old 06-28-2020, 09:42 PM   #16
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Japanese supercomputer Fugaku zipped past all competitors to claim the top spot in the twice-annual ranking of the world's most powerful computational machines released by research project Top500.
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