International Business Machines Corp. (IBM)

Pre-margined shares with a debt financed buyback. This place is a financial engineering fiasco in the making. Not a well run technology company. With all the debt being piled on to buy shares to marginally up guidance this company is a huge accident waiting to happen.

IBM lists unfunded pension liabilities on its balance sheet seperately from "other liabilities" which is unusual.
With the unfunded albatross hanging around at 13bil in 2006 they borrowed money and bought back expensive 6bil of shares.
In 2007 they did the same thing but the shares were even more expensive, 18bil.
In 2008 they did the same thing again except the unfunded liabilities wer 18bil, and the share buyback 10bil at an even higher share price.
Then the share price collapsed.
They recently announced a 5% increase to the dividend, and 3bil more to the share buybacks currently in place for a total aproved 2009 buyback program of 6bil or so.
So rather than pay down debt of 33bil or fund the pension of 18 bil, the executives would rather borrow to drive up the share price.
If the relocation to cheap labor countries does not make an awfully big difference, then tomorrows new executives will be explaining they were not at IBM when the bad executive decisions were made.

Big Blue is cheap and employs some of the most brilliant minds in the biz. Should also profit from major push towards business outsourcing, using its $11 billion in annual FCF to fund projects.

This company is more diversified than most hi-tech concerns. Its hardware operations have held up in recent years as they've retooled to adapt mainframes to the internet age. Their services, which had hit a plateau of sorts after helping define the IT services market, are on the uptick again due to an emphasis on SOA (services oriented architecture). Beyond that, they have taken chip design from boring to sexy by aligning themselves with the major computer game console developers (Nintendo, Sony, etc).

IBM is a major component of the DOW, so it probably won't stray too far, but its kind of like a mutual fund in and of itself, considering the combination of hardware, software and services it offers, and it is also geographically diversified, offering some protection during localized downturns and fluctuations in currency.

The staggering size of this behemoth is going to keep this stock from going anywhere. This elephant ain't dancin' no more.

I could probably write 10,000 words on the difficulty of dealing with this bureaucracy both internally as an employee and, worse, externally as a customer; but anyone that's been around a big company knows how these things work.

One of the long term problems with the services business, at least in terms of the sort of consulting deals that IBM is looking to use to drive new business, is that often times the competition is led by an ex-IBMer. Well guess what happens when the competition is an ex-IBMer? They tell the customer, very convincingly, that IBM's proposal is 40% higher because of the 20 additional hands that have to touch the deal. Customers who have been frustrated by the IBM bureaucracy in the past don't have a hard time buying this.

IBM is struggling to build the vaunted high margin services business that is supposed to replace profits lost to the ever shrinking margins of the hardware business. The scariest part of the struggle is that we have yet to see the real downside that is going to happen as the high end high margin hardware platforms begin to disappear in favor of grids and utility computing. Seriously ugly numbers are going to start coming out as customers opt to replace ludicrously high margin mid-range systems and mainframes with racks of blades that carry profit margins less than half those of the dinosaur systems and worse, aren't necessarily manufactured by IBM.

I suppose there's always the software business, IBM's profit margins there are also ludicrous. Oh wait... open source... its going to drive a ton of profit out of the market.

On paper it looks great to be the biggest and the best in just about every area of the technology market, the problem is they have no where to go but down. Companies want to wring as much as possible out of every dollar they spend on IT and they want to have control over their technological destiny. No matter how much IBM has sung the praises of open source and open systems, the reality is that their bread and butter still lives in the land of vendor lock in. Embracing open source is just a teaser to try to get customers to invite IBM to stay. Hungry competitors who can actually deliver on their promises of openness and efficiency, because they don't have a business to cannibalize in doing so, are going to devour this elephant.

IBM may be very large but it is also undervalued. Its stock has taken some rather big hits unnecessarily over the past 2 years. Recently there has been a big push for developing websites and applications in java using IBM's websphere application server. Its also the developer of the Cell processor which is being used to power the Playstation 3. There are also future plans to use the Cell in all manner of electronics. This stock is cheap rith now and will go back up into the 90's soon.

IBM is a big ship, but it is fairly beaten down and should provide solid 10 - 12% returns (Div. included) for the next few years.

IBM is another solid blue-chip that has a great infastructure in place. They still do good research and produce quality products. Their P/E is only 16, which is about in line with the overall S&P, but I think IBM has the ability to weather a financial storm if they need to.

IBM is a formidable competitor in technology. Because of size, execution can be slow and over-complicated. But, in terms of intellectual capital and R&D, they are without peer. Recent moves are astute: 1) expansion in India; 2) making services more systematic (and higher margin) by using software more; 3) moving into higher-risk, higher-margin transformational consulting.

IBM, like many of the large cap stocks of late, has been languishing until recently. It's P/E ratio of 16-17 makes it look more like an old line manufacturing company rather than the high-flying technical innovative leader that it really is. IBM is normally at or near the top of the list of most innovative companies in the world, as measured by the numbers of international patents filed.

Since breaking out of a five year downward trendline at the beginning of 2007, it has been on an upward path that's raised it about 15% so far this year. I don't see this faltering for about another year, until it gets back up to the previous 1999 high of about 130. That's about a 13% growth rate. I don't think the S&P, or the DOW will do that well over the year 2008.

The daddy of tech stocks. Pays dividends, and keeps growing. You can buy this and hold it unti you retire. Big capital has been lagging. In past six months, IBM has started to move. Expect a small dip in January for tax year reasons, but buy now.

IBM's major divisions today are the chip division (through gaming CPUs such as the Wii, Xbox and PS3) and software. I think that sales for game consoles will slow in the year to come, one to two years after Microsoft, Sony and Nintendo released their latest generation of game consoles.

On the side of software, IBM is still making a lot of cash from software sales, particularly to Fortune 500 companies. On the other hand, most of these software suck in my opinion, and many players such as Microsoft are gaining market share on software sold to big companies. This is true for information management software and company productivity suites (Microsoft is still gaining market share against Lotus). IBM may have good profit numbers as of today, but I see it as an old company that is not able to follow the market and invest in the wrong technologies (Linux, Open Source, etc.).

I think this stock way undervalued. They are big into services and that is where the money is and will be for a long time.

No one is paying attention to the deal with Magna electronics. IBM is positioning themselves to be the architect of "smart car" computer systems, and creating multiple business opportunities for themselves in terms of hardware, software, storage, operations, and management services channels in the auto industry.

IBM is intentionally growing through aquisitions. They have 10.6 B cash to fund these. They have also been chipping away at outstanding shares for years, boosting EPS. 15B operating cash flow and 1.3% div yield. Long term core holding.

What a surprise! IBM tanks after their earnings which beat estimates. A company this large and this average cannot go up 30%+ in one year. I know 9 people who worked at IBM and 8 of them have left, all of them saying what a bad company it is to work for and how it is filled with morons. That's the Canadian division of operations but I don't doubt its the same elsewhere.

Every other big tech firm dominates an industry and is the first thing you think of when you think of a certain product. Ex. Business Software, Video Games ---> Microsoft Office, XBox, MP3 Players --->AAPL Ipod, computer chips ---> INTC, Search Site --->GOOG, computers --->DELL. IBM is too slow moving to keep up with the competition.

Look at their summary: "An innovation company, serving the needs of enterprises and institutions worldwide. Seeks to deliver clients success by enabling their own capacity to innovate, so that they may differentiate their organizations to create unique competitive advantage."

LOL what the heck does that mean?

This ain't your daddy's Big Blue. IBM has cut the dead weight and now they're lean and mean. This is how a bloated company with an outdated business model can turn itself around. GM could stand to learn a thing or two from them.

The beginning of this nascent mini-bull market is the perfect time to buy, and I expect them to outperform both their sector and the market at large for years to come.

IBM will continue to plod along and will break out when everyone needs to refresh their infrastructures starting in 2007. It takes 8-10 years for IT to fully depreciate the use of their assets. Given that the Y2K bubble was such a large ingestion of infrastructure, I expect the 8-10 year wave to be large.

IBM is vastly undervalued. In addition to its leadership position in nearly all things IT, IBM is also a serious Cloud Computing play. Pundits seem to oogle over Google when it comes to Cloud Computing. I would argue that IBM is better positioned to reap the rewards if Cloud Computing truly is a disruptive technology of the near future. Its vertical strength up and down the Cloud Computing "stack" virtually guarantees IBM fully partakes in Cloud profits. Its hardware verticals from Intel-based servers to P series servers to Z series mainframes, the ubiquity of which in Cloud Computing cannot be understated from a value perspective, provides IBM with a unique ability to create Cloud data centers at lower cost than competitors. Its software is the the leader in middleware and also has extremely strong offerings in collaboration and systems management and monitoring. And its services combined with its R&D prowess and deep understanding of its clients' businesses positions IBM to be the leader in Cloud Computing. This is gravy on top of an enterprise already undervalued even if all one considers is "business as usual."