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IBM: Eight In a Row!

Daily Rap 04-17-2014

Overnight markets were generally higher, but uneventful relative to some important earnings reports. Google was unsuccessful at beat-the-number, with earnings slightly below expectations. Despite an attempt to spin it all as good news on the call, the stock was initially a little over 3% lower. More interesting was the fact that IBM only managed to exactly make a (lowered) number. Revenues were down for the eighth quarter in a row, and an examination of the earnings themselves showed a tax rate, write-off, and buybacks that were all different than analysts expected. In addition, if one looks at the traditional "cookie jar" that IBM uses, that being divestitures, which are counted as contra-expenses, they were higher than last year and included an...more

Last year's posts for Ask Fleck

Q: Dear Bill,

one question relating to Mr Skins and your assessment that a selloff could become bad if cascading sales orders and margin calls hit the markets:

during Lehmann-selloff, gold also was sold heavily as anything was made to cash. Would that not be the most likely scenario?

Chinas demand cools off since February. Indias is down by 50%. Those are the two largest physical buyers. It looks like this time they wont jump to golds rescue.

Fleck: There is a difference between a computer-inspired stock selloff and a banking system meltdown. Your China/India data may or may not be accurate, much of that is just conjecture, but if you are personally nervous then lighten up.
(posted: 4/17/2014)

Q: Bill, Are you familiar with NSRPF, Novo Resources and the story behind it? That, according to some notable people, it may well be a duplicate, and the only one ever found, of the Witswatersrand gold deposits of S Africa. It was trading around 60 cents earlier last year, and recently went up to about $2.00, and is now trading at $1.65 per share. I must say the story is VERY interesting. Newmont bought a 30 percent stake in the company for about a dollar/sh in the last 6 months.

Fleck: I don't know much about it at all, but I haven't seen many Aussie mining ideas that have worked too well (they have been even worse than many others), but it does seem interesting.
(posted: 4/17/2014)

Q: Hey Fleck,

Interesting comment from Mike O'Rourke at Jones Trading on the IBM results:

"Lastly, the Bloomberg headline that “IBM Sales fall for the 8th quarter…” caught our attention. IBM is a microcosm of this equity market. Despite the 2 years of declining sales, at today’s close, IBM was up nearly 5% year-to-date outperforming the broad market. What is even more egregious is that according to Bloomberg, IBM has missed its sales estimates 11 of the past 12 quarters. The big driver of IBM share performance and its earnings is the fact the company has reduced its shares outstanding by 25% since the start of the recession in December 2007. There are many blue chips that have done the same. Just to name a few Exxon shrunk its shares outstanding by 21%, Home Depot by 20%, Intel by 15% and Cisco by 15% as well. That is just to name a few, we suspect it is only a matter of time before investors start shrinking such multiples rather than expanding them."


Fleck: I agree, thanks.
(posted: 4/17/2014)

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