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  • Why I Am Not Selling Gilead [View article]
    Around 2.5mm US patients are gt-1. ESRX's 25mm they are dropping Harvoni is about 10% of US insured. Maybe 250m US patients will be moved to Viekira initially. The problem is not the lost mkt share, it is the precedent. GILD will become a price taker, not setter. That's a huge downside risk, and completely missed in this article.
    Dec 22, 2014. 03:58 PM | 7 Likes Like |Link to Comment
  • 3 Reasons IBM Might Quiet The Naysayers In 2015 [View article]
    lol
    Dec 16, 2014. 10:48 AM | 2 Likes Like |Link to Comment
  • IBM Is Playing A Game Of Hot Potato With Goodwill [View article]
    I think there is a point to be made, and maybe this is what the article points to, that IBM acquires a lot of companies, and will book a lot of goodwill due to that. It is silly to think that IBM has made every acquisition a hit over the years with no duds. They are succeeding at making earnings look better because they haven't taken write downs. It's capitalizing R&D, and there will be write downs to come. That will erase the value mirage that they project now.
    Dec 9, 2014. 02:00 PM | 2 Likes Like |Link to Comment
  • IBM Is Playing A Game Of Hot Potato With Goodwill [View article]
    Goodwill is admitting that you paid too much for an acquisition.

    No, it is simply paying more than book value. You could buy KO for half the mkt price, and have a huge goodwill entry. Have you overpaid?

    Incorrect understanding of accounting is a huge detractor from investment articles.
    Dec 9, 2014. 09:43 AM | 5 Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    Never said or tried to imply that IBM bought Myspace. I was referencing how badly acquisitions can turn out in tech, and never show any sign of loss until the actual write off. I would suggest you take an accrual accounting basics class, because it can be explained over and over, but I can't understand it for you.
    Nov 24, 2014. 09:16 AM | Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    True. But do investors? GAAP and accounting rules are not perfect.
    Nov 20, 2014. 04:03 PM | Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    When they acquire a company, vs internally developing, they get a boost to earnings because the acquisition is not expensed initially.
    If I am a CEO, and I want to show higher margins and earnings, I would acquire a bunch of products/tech/etc vs developing it internally. That needs to be adjusted for when looking at a company as an investment, and especially when you are looking at an earnings multiple that appears cheap. IBM appears cheap because the acquisitions are keeping expenses from the income statement. Nothing wrong with that, but investors need to see that and adjust for it.


    I mention Myspace as an example. News Corp took no earnings expense when buying. It was years later that they took the expense, and it happened to be a nearly full write off. You could have expensed that acquisition of a questionable tech business and not been blindsided by buying the artificially high earnings because the expense wasn't there.
    Nov 20, 2014. 03:27 PM | Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    AAPL will not necessarily specify individual price on acquisitions, but they do list aggregate amounts in their financials. And I do adjust the tech companies i look at for what i view as logical inclusions or exclusions that will help clarify the actual business economics.

    I don't think I would buy IBM unless it got to a level that was plainly silly, which may or may not happen. AAPL at $70 (split adjusted) was plainly silly.

    I look at investments as if nothing is wrong, then something might be right. In this case, I can see a lot that is wrong, and there is no one forcing me to own it. I think a lot of people own it because of Buffett, and because it's always in the news because it appears cheap.
    Nov 20, 2014. 02:59 PM | Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    AAPL's acquisitions are around ~6% of traditional FCF. IBM's are in the ~25% range. That is the difference. Those acquisitions don't show up as an earnings expense, until down the road when they are likely written off as a "one time" expense. Recall when Myspace was acquired..........not a single expense line to earnings. Years later........... Tech acquisitions shouldn't be assumed to be long lived just because GAAP says so. All I am doing is trying to show how IBM gooses their R&D expense by acquiring.

    My broad point is IBM's "low multiple" and "cheap valuation" is a fallacy.
    Nov 20, 2014. 02:16 PM | Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    You are missing the forest for the trees. To each his own.
    Nov 20, 2014. 02:06 PM | Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    Apple is a tech company, yet they don't buy their innovation with acquisitions. Oracle makes acquisitions, yet not nearly to the extent IBM does. If you think that acquisitions in tech should be accounted for as if they have indefinite assets lives, then why not capitalize R&D? Either way, both R&D and acquisitions should be treated the same in tech. You have to adjust one way or the other. The same is not true for a stagnant, slowly innovating industry. Tech is not that industry.

    I didn't expense dividends or stock comp, but showed that dividends are a big chunk coming out of unadjusted FCF. If IBM halted their dividends and buybacks, what would happen? That's why I look at it as a detractor from FCF. It isn't an option for them. It is a recurring cash drain now.

    A note too, GAAP accounting, for the most part, is skewed towards debt issuers/holders, not equity investors.
    Nov 20, 2014. 08:07 AM | Likes Like |Link to Comment
  • IBM Fundamental And Algorithmic Analysis: Will Big Blue Bring Big-Time Blues? [View article]
    IBM is a $100B rev company.................. spent almost the same amount the last 10 years to grow, and failed. Hope they turn that 100M fund into a few billion.
    Nov 13, 2014. 04:45 PM | Likes Like |Link to Comment
  • IBM Fundamental And Algorithmic Analysis: Will Big Blue Bring Big-Time Blues? [View article]
    if it takes more than a couple minutes, the investment is probably very flawed.
    Nov 13, 2014. 10:30 AM | 2 Likes Like |Link to Comment
  • Oracle: Worth $40 Per Share [View article]
    Not sure random assumptions add any weight to a fair value number. Where is 9% growth dropping to 5% found in any decent business model? Considering their cloud growth is accelerating, I am lost.
    Nov 11, 2014. 11:14 AM | Likes Like |Link to Comment
  • IBM: Red Flags In Free Cash Flows [View article]
    thanks. tomato, tomatoe. ha
    Nov 4, 2014. 10:19 AM | 1 Like Like |Link to Comment
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