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Alexander J. Poulos  

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  • Illustrating Why I Choose To Invest In IBM Again [View article]
    Gio,

    I am not sure I agree with the commoditization thesis. Watch the margins in these fields, they have held up remarkably well a sign of pricing power. Thanks for reading and commenting.
    Jan 18, 2015. 01:42 PM | 1 Like Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    ctman,

    Thank you for the insightful comment. It remains to be seen whether Rommety will be able to pull the transformation off. The one thing I am quite confident in is the board will act if she falters. That is the inherent beauty of investing in well established strong companies. The chance of running such a large enterprise and leading it back to prominence would be the highlight of any executives career and the stuff legends are made of. If she does fail, it will be interesting to see who's next.

    Lets use MSFT as a recent example. Under Ballmer the stock was flailing around aimlessly then a sudden change was made, in comes a new CEO and the stock has taken off.
    Jan 18, 2015. 01:40 PM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    juleman,

    Not only can he be tenacious he is quite patient when he establishes a large position. Buffet will exit out of smaller plays from time to time, yet the dollars committed to IBM leads me to conclude he views IBM as his next Coke/Wells Fargo. He mentioned it will take a while for the transformation to be completed and yet he continues to add. Thanks for the comment.
    Jan 18, 2015. 01:35 PM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    Ge,

    I very much concur on the INTC analogy. I sold INTC prematurely in 2013 and wrote about my reasons for the move http://seekingalpha.co...

    Needless to say, a poor move. I was afraid history may repeat itself with IBM and decided to really review the numbers to determine why Buffet likes it so much. The numbers here are very appealing and I decided to reinvest. Lets hope for us IBM longs, the move will be a success. Thanks for reading and commenting.
    Jan 18, 2015. 10:45 AM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    hclasvegas,

    The is risk in investing, let me address your two points.

    1- With the recent sell-off in the shares, I suspect the downside is minimal from here. Those that wanted to sell have left leaving the stronger, long term investors. IBM is a value play here trading far below a market multiple.
    2- As for Buffet, I highly doubt he will be selling at this point. To the contrary I would not be at all surprised if he added to his position. I suspect he is focusing on the balance sheet and the magnificent job IBM has done raising GM, adding to its cash pile and reducing shares outstanding. He is fully cognizant the turnaround will take time as they shed non core ops, he has said so himself.

    We shall see how the market reacts to their coming earnings release. Thanks for reading and commenting.
    Jan 18, 2015. 10:41 AM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    slam,

    With the recent collapse in the share price, I feel a bad earnings report is factored in. There is risk in any entry, yet I feel at the current quote the potential reward mitigates the risk. Thanks for reading and commenting.
    Jan 18, 2015. 10:35 AM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    brian,

    The TDY example was the use of corporate funds not personal funds of the CEO. Thus, IBM share repurchase plan which is aggressively reducing the float mirrors TDY move. IBM unlike many other companies actually pays employees in restricted shares and not options. Many companies repurchase shares in the open market to offset dilution from employee option exercise with KO an excellent recent example. KO repurchase over the past ten years hasn't really reduced the float. Thanks for reading and commenting.
    Jan 18, 2015. 10:33 AM | 1 Like Like |Link to Comment
  • Taking Advantage Of Foreign Market Weakness To Initiate A Position In Diageo [View article]
    V,

    Couldn't agree more, thanks for reading and commenting.
    Jan 18, 2015. 09:31 AM | 1 Like Like |Link to Comment
  • Gilead Sciences' Recent Trading Pattern Is Much To Do About Nothing [View article]
    Biotech,

    Under the heading Levered Returns model, if you click on the first tab marked earnings assumptions it opens up showing you the calculation used to derive the price target.
    Jan 17, 2015. 11:34 PM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    tuliptown,

    The continuing complexity of running a companies computer systems, IT work will continue to be outsourced. Second part is mobile/cloud based systems.
    Jan 17, 2015. 07:35 PM | 2 Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    rgperrin,

    Lets hope my faith is well placed. Thanks for reading and commenting.
    Jan 17, 2015. 07:33 PM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    Bahamas,

    Thanks for the words of encouragement. Lets see how it plays out.
    Jan 17, 2015. 07:32 PM | 1 Like Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    Timmies,

    I didn't purchase HP either, I just couldn't get comfortable with the story. I am quite comfortable here, lets see if my faith is well rewarded. Thanks for reading and commenting.
    Jan 17, 2015. 07:32 PM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    maybenot and Miguel,

    Let me elaborate further on the transformation by using division numbers over the past couple of years.

    Fiscal year 2011 for the whole total revenue $106 bill. gross margin 47.2%
    Global Tech and Business Services $60 billion GM 33.2%
    Hardware sales $19 billion GM 39.8%
    Software $24.9 billion 88.5%

    Compared to 2014 estimates total revenue $93.6 billion GM 50.5%
    Global Tech and Business $55.5 GM 35.6%
    Hardware sales $9.8 billion GM 34.6%
    Software $25.8 billion GM 88.4%

    I think these numbers help illustrate the trend in IBM. IBM by existing lower margin lines of business predominetly in hardware has managed to raise the GM of the group by over 3%. We can also clearly see the impact of the commoditization of certain lines of business in IBM hardware division as the GM has shrunk over this period.

    By growing their far higher margin software division IBM will generate more profit per dollar of revenue. The service side is rather predictable since this business tends to be contract based allowing for the ease of predictability. Hope this helps. You may want to check out this article I posted on CTSH to get a handle on a similar company in the consulting field.

    http://seekingalpha.co...
    Jan 17, 2015. 07:30 PM | Likes Like |Link to Comment
  • Illustrating Why I Choose To Invest In IBM Again [View article]
    maybenot,

    You are very welcome. IBM should be viewed as a consulting firm such as CTSH. IBM is a steady performer and does not operate in a cyclical industry which makes them quite appealing. Thanks for reading and commenting.
    Jan 17, 2015. 04:14 PM | Likes Like |Link to Comment
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