IBM taking a hit today, down 8% | Page 2 | TigerDroppings.com

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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
84288 posts

re: IBM taking a hit today, down 8%


Again, why do you think your comments have any relevance directed to me?

Do you think I've posted anything negative about IBM's future and you need to prove me wrong?

My 1,450 shares of IBM stock probably prove I believe more in IBM's future than you do.

Or, is this just more of your butthurt left over from the bitcoin threads?







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gizmoflak
Georgetown Fan
Member since May 2007
9112 posts

re: IBM taking a hit today, down 8%


quote:

My 1,450 shares of IBM stock probably prove


Expanding your playbook to include dick-measuring contests, huh?






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
84288 posts

re: IBM taking a hit today, down 8%


You come up with some lame comments about IBM's earnings and future totally unrelated to the question Zilla asked and to which I responded because you are obsessed to prove me wrong about something even when I've not posted anything contradictory to what you're trying to prove me wrong about.

It's obvious your bitcoin butthurt transcends thread topics.

And, yes, my dick is bigger than yours....






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gizmoflak
Georgetown Fan
Member since May 2007
9112 posts

re: IBM taking a hit today, down 8%


The irony is that I'm with you on your long position w/r/t IBM. I made the simple point that IBM relies heavily on R&D as a corporate strategy. short-term dips in price or earnings should not be cause for alarm.

But you are so blinded by your bitcoin rage (you brought up bitcoins, by the way) that you assume everything I type is an affront to your keen financial sensibilities






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
84288 posts

re: IBM taking a hit today, down 8%


quote:

should not be cause for alarm.
Where did I or anyone else in this thread exhibit any alarm? If anything we were saying the drop in price was unwarranted and overdone.

quote:

you assume everything I type is an affront to your keen financial sensibilities


If you weren't trying to prove me wrong about some perceived comments I never made about IBM's future, explain the following post you directed to me, especially the last line.

quote:

IBM has huge long-term staying power largely thanks to their undying devotion to R&D. Short-term hiccups are of little concern to IBM's brass. If you don't understand that, then I can't help you.


I brought up btc because that was the only logical explanation for your attempts to prove me wrong about something I never said. Which is also why I asked you several times what your point was since you were refuting points no one had made. And you ignored my question.

Don't go to your playbook and ignore my question again.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
84288 posts

re: IBM taking a hit today, down 8%


quote:

dick-measuring contests,







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Zilla
LSU Fan
Friendswood, TX
Member since Jul 2005
10033 posts

re: IBM taking a hit today, down 8%


Russian, thoughts on this guy's points?:

LINK

quote:

IBM (IBM) is going to cost Berkshire Hathaway [(BRK.A) (BRK.B)] a lot more than the $1.3 billion of paper profit that has vanished since last Friday. With a cost basis near $170 per share, it's unlikely Warren Buffett can sell 68 million shares of IBM without driving the price below $170, but that's what he should do: Sell IBM.

The problem for IBM: Its operating model is built around selling on-premise computing - including so-called "private clouds" - but the $3.6 trillion IT industry is moving at an accelerating pace in an entirely different direction, to the public cloud, which is a low-margin utility model.

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As Adrian Cockcroft, CTO of Netflix (NFLX) said, "there is zero revenue for traditional IT" in the public cloud. Users pay low variable expense (prices have been dropping from cheap to super-cheap) with no capex. Question: How can IBM compete with cheap "rented" computing power? Answer: It can't.

The public cloud is not an environment in which IBM can generate much profit because, as Salesforce.com (CRM) CEO Marc Benioff said, "IBM needs to sell a box, and the cloud is not a box." IBM can't tell its customers to tap into a computing utility (the public cloud) on a pay-as-you-go basis. It needs customers to continue to buy expensive packages of hardware, services and software in order to support its high-margin operating model.

IBM has ceded the low-margin public cloud market to others, and has focused on the private cloud market. It's a strategy doomed to fail, and here's why: When you construct a private cloud, you give up everything that is wonderful and beautiful about the public cloud. Trading capex for low variable expense doesn't happen when you have a private cloud. You still have huge capital outlays when you build on premise. And there's waste involved in building a private cloud. Instead of paying only for what you use, private clouds are built for overcapacity (capacity is typically built to handle 15% above peak usage).

For a tiny fraction of the cost of a private cloud, users can tap into the public cloud by connecting to a cloud service host. In terms of user experience, comparing a private cloud to a public cloud is like comparing travel on a horse & buggy to a Ferrari. You're either tapping into limited on-premise computing power (whatever your capex budget can afford) or into the vast power of a centralized, shared infrastructure. Computing projects that used to take weeks are now completed in an hour or two on the public cloud, and at a fraction of the cost.

IBM's long-term prospects are troublesome

The move to the public cloud is already entrenched among smaller companies, and upmarket migration appears to be gaining traction. As venture capitalists will tell you, entrepreneurs and startups are all building their IT infrastructure in the public cloud. (There may be an exception, but I couldn't find one, even in companies with over $100 million in funding.) This suggests IBM's long-term prospects are particularly troublesome, as it will have to wean tomorrow's enterprise customers off of a low-expense utility model and onto the high-capex private cloud model.

People in the industry tell me at least half of Fortune 1000 companies are already experimenting with the public cloud. Further, most government agencies are looking hard at the public cloud as a way to save money. Companies and government agencies are generally testing new workloads at this point (as opposed to migrating existing operations), but others are moving much faster.

Samsung recently moved one of its computing hubs to the public cloud, saving $34 million in the process, and Netflix has moved everything (their entire IT infrastructure) to the public cloud. That's a big deal for the likes of traditional IT, since Netflix is one of the biggest consumers of computing power.

IBM's latest earnings miss is just the beginning

The way I see it, IBM has one hand to play and it's a bad hand. It can't get behind the public cloud because it's a low-margin utility. So it's forced to defend the status quo, and ask their customers to continue constructing capex-heavy on-premise computing environments. Now that companies have a choice, they are pushing back on IBM.

That's what I suspect happened during IBM's disastrous first quarter reported last Friday - and, yes, it was a disaster. But for a change in the tax rate, the earnings miss would've been 34 cents instead of 5 cents. In the coming quarters, you're likely to see similar results from IBM: big earnings misses, declines in revenue, and a management team in denial.

(By the way, as much as I don't like IBM, Berkshire continues to be one of my holdings, and is one of my Top Ten picks for 2013. If you'd like to review my Top Ten list and its performance, go here.)

The emergence of the public cloud materially changes IBM's competitive environment. As such, the stock no longer belongs in Berkshire's portfolio for a single, simple reason: It's too risky. Of course, anything is possible, and maybe IBM can make enough acquisitions to compensate for future losses. But it's not Buffett's style to speculate on turnarounds. To borrow from Einstein's characterization of God, Warren E. Buffett does not play dice.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
84288 posts

re: IBM taking a hit today, down 8%


quote:

, thoughts on this guy's points?:
His points exceeded my attention span. Sorry.

IBM was up over $4/share earlier today before "The Tweet." It's still up almost $3/share.






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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
30530 posts

re: IBM taking a hit today, down 8%


quote:

Any idea why IBM is down so much?


I think they're doing a job fair on campus.






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Zilla
LSU Fan
Friendswood, TX
Member since Jul 2005
10033 posts

re: IBM taking a hit today, down 8%


bump.... nice call Ivan!






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