The Street loves murky uncertainty.
https://www.marketwatch.com/story/ibm-stock-slips-after-earnings-show-another-revenue-decline-11603139248
10 replies (most recent on top)
"IBM has transformed into a finance company! "
Yes, but not even a good one! lol!!
IBM has transformed into a finance company!
AK knows he is screwed... he just came up with the NewCo split to delay the obvious and to try to give himself some more time to make his millions at IBM until he has to go. He is trying to show there is some hope but we all know IBMs is doomed because IBM execs are id–ts, too greedy and they really don’t understand what the Cloud business is all about!
You are correct that FCF is 12 billion a year, BUT FCF in 2020 3rd q has put the fear of god into management and they are hoping it comes back come 4th q. Last year 1.8 billion This year 1.1 billion This trend is quite unsettling and has caused Wall Street to pause on IBM. (there is a reason the stock took a dump today even after making its pre-announced numbers) The LT debt for RH is adding approx 1 billion extra costs per year. If interest rates go up, or revenue continues down, the current go to market plan does not close and IBM is in trouble. FCF will certainly improve for 4th q as IBM is backend loaded, BUT if it comes up short like 3rd q did watch out.
The company’s free cash flow was $1.10 billion, below the FactSet consensus of $2.26 billion and the lowest since the first quarter of 2001, according to FactSet.
Looks like most fools on this board have no clue about finance or the financials. The dividends are 6B/ YEAR not quarter and FCF is 12B / YEAR not quarter.
If you are an ibm'er with this level of knowledge about divis and FCF - U deserve to be on the next RA list.
Dividend is the only thing keeping IBM from being a $70 stock. Dividend means no money for investment so IBM will never grow revenue. Such a dilemma.
The real eye opener from yesterday was that IBM’s 3rd q FCF didn’t cover the dividend That should be a red light flashing Debt is crushing FCF IBM go faster in your restructuring because time is not on your side It’s hard to grow when you are out of cash, and can’t borrow anymore
What a surprise (another revenue decline)... IBM does not care about revenues, even though AK said many times it is his top priority. The reason IBM doesn't care about revenues is because they know they can't grow revenues!
On the earnings call (3Q 2020), AK talked about being aggressive on M&A... Two analysts asked the question how and whether it was realistic without cutting the dividend? IBM as a free cash flow of 12B a quarter, but has to pay 6B of dividends each quarter... that leaves 6B to reinvest in the business and M&A... that is pocket change. Instead, AK said that he wants to keep on increasing the dividend!
So more financial engineering in the horizon, which means more layoffs, no investments, etc...
There is no hope with this company... and as of this morning it is reflecting in the stock price, $118.
The stock hit a high of $142 after IBM announced the split to NewCo...
Yes but every IBM share will get a free share of NewCo so it will come out even from a split perspective.
Question to the expert investors out there: Won't IBM's stock price fall a ton after the company split since IBM is loosing a large chunk of its current revenue to the NewCo?