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User 486211

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  • Seriously, Can Hewlett-Packard Be This Cheap? [View article]
    In the short term, market sentiments reign.

    In the long term, business fundamentals prevail.

    When Lou Gerstner took over IBM in 1993, he was faced with a cumulative loss of $16B in the previous 8 quarters, and had had to lay off 70,000 staff in the following 8 quarters. He made one critical decision, to keep IBM as ONE company.

    Whitman's turnaround challenge is much easier compared to that of Gerstner. The company is still achieving 9+% operating margin, merging PC and Printing business to create a superb Global # 1 leverage on the supply chain and global distribution channel will generate higher ROI. 30,000+ staff cut is being undertaken now, although which is unfortunate for the families affected. Future growth areas such as Security, Cloud Computing and select Software areas had been singled out.

    Lou Gerstner is not an engineer and he made it. Lou has a superb talent that seems to also exist on Whitman, namely, "being able to see things as a WHOLE". Whitman used to be VP of Strategy at Proctor & Gamble, that position also demands similar talent.

    One thing I applaud is Whitman's decision to eliminate executive suites and now all executives are in cubicles, a great Silicon Valley tradition pioneered by Intel.
    Sep 8, 2012. 02:29 PM | 10 Likes Like |Link to Comment
  • Want to Seek 'Significant' Alpha? Look Beyond Dividend Stocks [View article]
    Chuck,

    Another seminal article from you! Look forward to your next one on how to build a high quality fastest growing stocks portfolio!
    Apr 13, 2011. 05:47 PM | 8 Likes Like |Link to Comment
  • Should Investors Be Scared Witless? [View article]
    A fantastic article! So succinct and so timely! Dr. Miller did it again! Really appreciate this great piece of work at a critical juncture of time amid market turmoil!

    CT
    Jun 21, 2013. 12:53 AM | 7 Likes Like |Link to Comment
  • Dear Warren, About IBM... [View article]
    Excellent points.....No wonder Warren Buffett never responded to the author......
    Nov 29, 2013. 07:04 PM | 5 Likes Like |Link to Comment
  • Is IBM A Promising Dividend Stock? [View article]
    A better way to gauge a stock's potential is to use the "Total Return" framework, i.e., annual dividend yield + annual EPS growth rate, rather than a minimum fixed dividend yield requirement. Otherwise, Warren Buffett wouldn't be the No. 1 holder of IBM stock now.

    IBM's superior free cash flow generation capability enables it to continue to engage in sizable stock buybacks, which in turn will trigger superior EPS growth rates better than its peers. Thus the capital appreciation prospect for IBM is better than the market average.

    To judge a stock's prospect, it is better off to look at both the dividend yield and the capital appreciation potential, not just the dividend alone. The author bought IBM at $80 in early 2009 via this Total Return framework and made a fairly good return on IBM, Buffett started to invest in IBM in early 2011 and now is the No. 1 shareholder of IBM.

    C.T. Wu, PhD
    Mar 18, 2013. 04:34 PM | 5 Likes Like |Link to Comment
  • Weighing The Week Ahead: High Hopes For Housing [View article]
    Dr. Miller,

    Your weekly articles are the cream-of-crops among Seekingalpha's. Thanks for your generous sharing of your hard earned insights!

    CT
    Sep 18, 2012. 02:12 PM | 5 Likes Like |Link to Comment
  • Did Buffett Buy IBM Because Of The Economy? [View article]
    IMHO, Buffett bought IBM mainly because of its highly resilient and sustainable business model that will produce a stream of growing EPS' for its sharesholders year after year. As roughly 70% of IBM revenue is from long-term service or equipment lease contracts, it is also much recession-proof compared to other types of business model. As a matter of fact, IBM's revenue didn't drop during the 2008/2009 financial tsunami due to the facts mentioned above.
    Mar 16, 2012. 12:37 PM | 4 Likes Like |Link to Comment
  • Technology Stock Investing - Keys To Success [View article]
    A great inaugurating article for SA! Welcome to the board!
    Jun 27, 2013. 08:13 PM | 3 Likes Like |Link to Comment
  • The Google Transition [View article]
    Excellent points!

    You don't need to raise a cow in order to drink milk. There are a lot of negative consequences attached to the MMI acquisition. It makes the whole business model of Google harder to optimize, Android partners alienated, and financial indicators going in the negative directions. The net result will be the eventual loss of the capability to generate sustainable EPS growths.

    It appears that Google is doing exactly the opposite of what IBM has done since 2000. Over the past 10 years, IBM's revenue hadn't really grown much. 10 years ago, roughly 40% of IBM's revenue was contributed by the low-margin PC, hard disk and DRAM business. Today, they were replaced mostly by high-margin software and service contracts. Even though IBM didn't grow its gross revenue much in the past 10 years, its EPS has grown by more than 150% in the same period. In the end, it is the EPS which is the primary driver for stock price, not revenue.

    Google has a lot to learn from IBM regarding how to pursue smart acquisitions that will facilitate Business Model Optimization, not the other way around.
    Jan 21, 2012. 01:09 PM | 3 Likes Like |Link to Comment
  • Hewlett Packard's Strategic Shift Is A Big Mistake [View article]
    Hi Neal,

    Excellent write-up about HPQ!

    I guess one thing a lot of people getting confused is about the fact that "low margins multiplied by high inventory turn-over will yield superb ROE figures", so gross margins are only one element in the total equation, and ROE is the end-game.

    Both DELL and WMT have low margins and high ROE's, and I bet HPQ's PC business should contribute much more to the company's overall ROE, because its inventory turnover is high compared to the rest of HPQ's so-called high margin business units.

    Per the strategy guru Professor Bruce Greenwald of Columbia University who chairs up its Value Investing Program where Warren Buffett offers a free 3-hour seminar each semester, Economy-of-Scale is one type of "Wide Moat" dreamed by any businesses. HPQ voluntarilty gave that wide moat away, at a great loss to its shareholders, because its CEO's wrong strategic vision and his poor handling of the planned divestiture.

    Ever since Leo Apotheker had taken the CEO seat of HP for about 6 months, I have been warning all my friends to exit HPQ, because as a 20-year veteran in the field of Business Model Optimization research, Apotheker has demonstrated that he is good at taking the opposite direction of wealth creation for its shareholders.

    As a big admirer of IBM's tremendous turnaround during 1993-1995, it is indeed too late for HP to chase after IBM, 15+ years later into the same game. Any fresh MBA students can tell that hard fact.

    CT
    Aug 22, 2011. 02:00 PM | 3 Likes Like |Link to Comment
  • Intel: My Take On The Earnings Report [View article]
    Flux8,

    With the same HW SKU, OEM's can offer two products, i.e., one being a cheap Android only tablet, and the other one being the more expensive Android+Win8. This is a huge advantage for OEM's to save cost and be more flexible to meet different market demands, and thus more willing to adopt Intel's new chip-sets.
    Jul 18, 2013. 04:46 PM | 2 Likes Like |Link to Comment
  • Why I Don't Love HP In 2013 [View article]
    The Dupont ROE Formula was a great one to analyze comparative company performances. However, it also could result in "Garbage-in-Garbage-out" situations.

    HP in 2012 had an improvement in Asset Turnover and Equity Multiplier, which is good. But its Net Profit Margin of -10.51% was due to two large one-time write-offs, or roughly $19 B altogether which should be adjusted in the ROE trend analysis.

    CT
    Jun 22, 2013. 04:46 PM | 2 Likes Like |Link to Comment
  • IBM: A Disaster In The Making [View article]
    Cognitive Computing is the Next Big Thing stated by IBM CEO Virginia Rometty in a recent Fortune Magazine conference. It has the potential to fully disrupt Google's success in the search engine business, as the new Computing system will be so intelligent, not just based on pretty dumb "text pattern matching" for searches.

    IBM has such a diverse array of IT products and solutions, and it has been a promoter of Internet and Cloud Computing for its enterprise customers ahead of other companies in retrospect, such unique Business Model Transformation caliber is what really drove IBM's success since Lou Gerstener and it is still live and active today.

    Apr 23, 2013. 10:43 PM | 2 Likes Like |Link to Comment
  • HP's Best Recovery Plan: Ignore The Analysts [View article]
    Adam,

    This is the most sensible article about HPQ that I have read in the past two months!

    Judging from a Business Model Optimization perspective, a field that I have been doing active research during the past 20 years, Meg Whitman is doing all the right things. The PC and Printing business are virtually already spun off because Whitman assigned a very capable executive to run it so she can focus on fixing the Service and Autonomy part. And the PC+Printing business will continue to be cash cows for the company, to support the needed capital for the enterprise units, on top of the purchasing power synergy.

    I bought a lot of 2014 HPQ Long Calls when HPQ dropped to $11.35, and that investment has already more than doubled in 3 weeks.

    Most analysts are not insightful in their analysis, and tend to just echo the market sentiments rather than providing professional guidance's.

    Look forward to reading more of your insightful articles!

    CT
    Dec 10, 2012. 03:02 PM | 2 Likes Like |Link to Comment
  • Hewlett-Packard: What About The Company's R&D Tradition? [View article]
    Tom,
    Thanks for another insightful analysis article!
    Whitman so far has demonstrated that she is a quite competent Business Model Optimizer for HP:
    1. Recognize and solidify its core
    2. Cut unneessary costs
    3. Grow the core with saved costs
    4. She does recognize that innovation and customer needs are the true drivers for HP's future.
    Whitman is just undoing the great damages to HP by its three ex-CEOs--
    1. Fiorina-- Recognize the wrong core and pursued it fiercely
    2. Hurd-- Cut the R&D roots, not costs
    3. Appotheker-- Try to turn HP into a pure software business that he is familiar with without recognizing the company's core; totally an incompetent CEO.

    As a Business Model Optimization researcher for over 20 years, so far I haven't been able to find major faults with Whitman's turnaround plans.
    Jun 28, 2012. 01:49 PM | 2 Likes Like |Link to Comment
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