^ IBM is a monster company – even if they surpass their short-term goals on Watson it’ll hardly show up in their numbers. This is a $100B annual revenue company, and they are *hoping* Watson turns into a $1B revenue business in a few years.
I’d be short if anything on this company.
randomly came upon this. pretty good read. free link.
http://www.diamond-hill.com/ibm-when-a-company-veers-off-the-roadmap/
Oh… I thought I had heard $20billion in revenue from WATSON. But what do I know, I only look at charts
Time will tell but I think WATSON will be hard to monetize as an offering to customers. A WATSON type system is the ultimate ‘end-game’ in information technology but we’re still in the stage of aggregating basic data and organizing it in a way we can access and manipulate on the fly. Once this point is reached I think the analytical technology will have already been developed by many other third parties (think Google, Microsoft, HP) and will be commoditized enough that WATSON won’t achieve the ROI ($1b development costs already into it) they’re anticipating it will.
Everyone I know who works at IBM says that they’re miserable and the entire company is mismanaged from the lowest levels to the highest.
No opinion on the stock.
Berkshire 13F should be out soon. If Buffett has the courage of his convictions, he would have added or held (overwhelming probability). If he has soured on the thesis like he did on Tesco, he would have sold - in which case there is no price low enough for IBM. Irrespective of actual prospects, tarders (*) will dump and short IBM to no end.
(*) I am just going to leave this typo in.
^ I’m so close to buying some puts on IBM, I may do it tomorrow morning. To me it really looks like it’s going to the $125 range based on the technicals. It’s for the most part trending on making lower lows, lower highs, next area of support is $125-ish, and sentiment on this stock flat sucks. Please someone talk some sense into me if you disagree.
lol yea. i track 13-fs they are required to be out 2-15-15. dont buy the puts. the bad news have already been digested. they have already lowered guidance. also puts are more expensive once they start trailing downwards. more importantly its a legacy stock. earnings has been growing double digits over a really long time period. would not bet against juss cuz of one or two bumpy years.
Agreed. Sentiment sucks on $IBM. But so was the case for bonds at the beginning of 2014. TLT up 27% in 2014.
So if anything, trade the other side of extreme sentiment readings. Much better reward/risk.
Thanks, both of you. I didn’t start a position on IBM. I’m not a chartist and I’m not an options trader, so venturing into stuff I don’t know too well will probably lead me to lose money.
I do want to start a short position on something as a hedge to my long positions (IBM seemed like a good candidate), so I’ll look elsewhere. Probably just a smallish short position on the S&P will do the trick.
Buffett increased position by 11% ~ $1B. No pop yet. Still… Prem Watsa also has a large position.
Maybe they know something we don’t. Time to coattail.
He wants that rich dividend cashflow!
I think we’ll see sideways trading until the next quarterly earnings report in April where IBM opportunity to disappoint is high. That second leg down should be a good entry point imo.
bump…
IBM dumps again AH on quarterly results.
terrible company. terrible stock.
What does IBM even do?
“Strategic outsourcing, integrated technology services, cloud, support services”
Hmm, sounds like nothing.
They only own the largest mainframe offering in the world with a 90% market share that runs at 40%+ gross margins.
Whenever you log onto the internet to access a website you’re likely using an IBM machine to crunch the data you’re requesting to be sent back to you.
Yeah, sounds like nothing eh?
except they’re slowly selling this business off, because the higher ups think soft services like what pa is talking about is the future. oh and they like paying 1000x what companies are actually worth.
True but they’re shifting to the cloud which is a similar offering with higher upfront profitability.
A lot of their issues are steming from their other consulting and offshore offerings which are coming under heavy pricing pressure as the industry continues to commoditize.
When did they get around to this? When I worked in venture capital we were investing in cloud like 7 years ago. I’m skeptical of a lazy company that waits till they are irrelevant, and then gets to work.
Look at AAPL, when you are on top, that’s when you should be investing in the future (cars, watches, radio, etc). Basically we are supposed to buy IBM just cause they are cheap? In the hopes they actually pull a rabbit out of the hat?
Personally I think Buffet is over, his picks don’t make a lot of sense to me.
About 190K of the 435K employees are management consultants in IBM Global Services. It operates like the standard consulting firm. Revenue is just price per hour x hours for sales. The exception to this is a fixed price contract where the margin percentage is set and revenues are determined by costs. There are a few other contract types, but are uncommon. yeah the other half of the company does something with computers lol - I don’t really know either The current CEO used to be the IBM Global Services leader.