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  • IBM: A 10-Year Review Of Return On Assets [View article]
    From IBM 10K.....
    "management considers Global Financing receivables as a profit-generating investment, not as working capital that should be minimized for efficiency." They make very little profit off a relatively large receivable base, but need that to financing to push sales.

    That drops pre-tax ROA quite substantially, when you listen to management, to the 14% range for 2014 and 2013. Did you just exclude the receivables, and then tout a useless ROA number? Looks like you did.
    Jun 11, 2015. 04:37 PM | Likes Like |Link to Comment
  • IBM: A 10-Year Review Of Return On Assets [View article]
    I like your answer in the thought behind it. Here is my issue.

    If you are ok with a lag time for R&D to pay off, then capitalize the R&D as an asset, which would lower the ROA. Regardless of GAAP, that would be the logical way to look at IBM, and in that case they don't look nearly as good.
    Jun 10, 2015. 04:36 PM | Likes Like |Link to Comment
  • IBM: A 10-Year Review Of Return On Assets [View article]
    This is ridiculous. How can you say they are doing a great job with R&D and acquisitions, when they spent a combined $100B on both over the last 10 years, and have only increased pre tax income by $7B over that time period. To me, they spent $100B and are earning an incremental $7B from it. That's 7%. Great use of money.

    Explain the how the above is not a huge track record of failure? They destroy value every year they invest money into R&D and acquisitions.
    Jun 10, 2015. 02:58 PM | Likes Like |Link to Comment
  • IBM Quality Of Earnings: A Quick Health Check [View article]
    Cash in that covers cash going out says nothing. They spent $100B over the last decade on R&D and acquisitions. What return did they get on that $100B? 7%. That is horrible. IBM can manage a 7% return on that $100B they invested, and they are geniuses? Great capital allocation there. They could have beat by simply buying a dbl A bond.

    THere is an assumption by many amateur investors today that just because some number is GAAP or came through the SEC, that it is sensical or even economically logical. That is simply not the case. It's a general lack of understanding why or how, and a reliance on a single source definition.
    Jun 3, 2015. 05:04 PM | Likes Like |Link to Comment
  • Valuing IBM From A Bearish Perspective [View article]
    Yes, the whole accounting of tech acquisitions is nonsensical. In an industry that changes as fast as tech, as an investor you are fine with IBM/INTC/etc capitalizing their R&D costs indefinitely by using acquisitions? It may work out, but in an industry where something worth $5B today can become worthless next year, I would rather adjust the earnings to show those acquisition costs expensed over 2 or 3 years.

    Also, returning an incremental 7% on $100B of investments over the last decade is far from saying IBM is patiently building powerhouse businesses. It's tech. A decade is easily 3-4 regular industry cycles.

    I will agree that the downside is probably very limited, but the upside is nothing near what the bulls think. It's a value trap.
    Jun 2, 2015. 05:59 PM | 1 Like Like |Link to Comment
  • Valuing IBM From A Bearish Perspective [View article]
    This can't be any simpler......IBM spent $100B over the last decade. What do they have to show for that investment?

    Ernie, you're right. Acquisitions aren't on the IS. So by acquiring their new tech and essentially acquiring their R&D through annual acquisitions like clock work, IBM simply hides that "R&D cost" through acquisitions, that otherwise would have been expensed had they developed it in house, and is why their earnings are way off from reality. Adjust earnings to reality and IBM is expensive.
    Jun 2, 2015. 03:20 PM | Likes Like |Link to Comment
  • Valuing IBM From A Bearish Perspective [View article]
    If you owned the company you wouldn't care about earnings per share, but you would care about the absolute level of net income or owners earnings relative to your asset base. Any way you define it, IBM spent $100B over the last decade. What do they have to show for that investment?

    Also, your owners earnings/gaap net income/op cash flow, whatever, does not take into account the money IBM spends on acquisitions year after year, without which they would literally spend nothing on R&D versus their competitors. If you are concerned with income if you were the sole owner, billions a year in value destroying acquisitions should be on your radar.
    Jun 2, 2015. 11:31 AM | 1 Like Like |Link to Comment
  • Valuing IBM From A Bearish Perspective [View article]
    IBM has spent nearly $100B in the last 10 years to fuel growth. Look at the added mkt cap or incremental net income. Don't look at revs though, those are down. Incremental net income is up 7.5B on that 100B investment. 7.5% return on investment is not adding value. IBM has destroyed value for years, and used some accounting to mask it.
    Jun 2, 2015. 09:27 AM | 1 Like Like |Link to Comment
  • Valuing IBM From A Bearish Perspective [View article]
    divs and buybacks have outstripped cash flows for years now. you are inferring that capital return is the same as investment gain, and it is not.
    Jun 1, 2015. 02:04 PM | 6 Likes Like |Link to Comment
  • Lumber Liquidators Overpriced At $40 And Has Legitimate Risk Of Going To $0 [View article]
    Believing an entertainment news show that exists to sell advertising, vs believing a public company's lawyer combed statement calling BS?

    I guess if Brian Williams was at the factory it would be more believable. He reports fact.
    Mar 3, 2015. 10:50 AM | 3 Likes Like |Link to Comment
  • Why IBM Is Better Than I Thought, But I'm Still Bearish [View article]
    Why use LIBOR? Seems irrelevant other than adding perceived precision.
    Jan 22, 2015. 01:43 PM | Likes Like |Link to Comment
  • Why IBM's Stock Will Face Turmoil In 2015 [View article]
    Sears has been around for 129 years. Simply implying that years in operation equates to a great investment is misplaced thinking.
    Jan 15, 2015. 09:58 AM | 5 Likes Like |Link to Comment
  • Civeo: Activist Involvement And Upcoming Dividend Increase To Close Excessive Discount [View article]
    How have all of the CVEO bulls failed to hear the CEO talk about contract renewal rates, and the lack of renewals they have seen. 3 mos ago that was discussed. He said it was material. Everything about CVEO has been a rehash of the Barry Rosenstein and DiDomenico piece in Barrons 6mos ago.
    Dec 29, 2014. 04:45 PM | 1 Like Like |Link to Comment
  • 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
COMMENTS STATS
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