Ed’s Daily Notes for May 23rd   Leave a comment

Business Week: The Trouble With IBM

The article above is a good review of IBM. One intriguing part (although I recommend the entire article for IBM shareholders or anyone considering buying shares):

…in November [2011], IBM received the ultimate financial benediction: Warren Buffett revealed he had broken his rule of not investing in technology stocks with the purchase of a 5.5 percent stake in IBM for more than $10 billion. Buffett liked how entrenched the company had become in the world’s IT departments; he said Big Blue was like an auditor or a law firm—really difficult to break up with. He especially liked the road map Palmisano had pledged before stepping down. “They have this terrific reverence for the shareholder, which I think is very, very important,” Buffett said on CNBC.

Buffett is right, to an extent. I know my company uses IBM’s Cognos reporting software, which is absolute crap. I will literally pull the raw data with Cognos, then use Microsoft Access to put the data into a format I can use. Even the IT guys I know look down their noses at Cognos. It is clunky and slow to program. For data mining, IBM is behind the curve, as SAP, Oracle, and even Microsoft are the “state of the art”. But like Buffett said, IBM is firmly entrenched in the world’s IT departments, like a productivity-sucking leech. But the article has another good line: “The corporate cliché of the 1970s and ’80s, that no one ever got fired for buying IBM, had never seemed less true.” Frankly, that day has arrived.

That said, I would view IBM’s stock as a “safe for now” play, but keep a close eye on it. While it won’t be dying in the next 5 years, I question whether they can execute a turnaround. The main thing to watch is what IBM’s competitors do: If they start to take big chunks of IBM’s business, IBM may be traveling down the Kodak road.

Bloomberg: Russia Sanction Naysayers Collect $90 Billion

This is one of those “kick me” charts:

Russia

I was thinking about buying Russian stocks when the Ukraine problems began, and I saw the weak response from the U.S. and Europe. I didn’t do it.

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Posted May 23, 2014 by edmcgon in News, Stocks, Technology

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