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Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

businessweek.com

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Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#21

Post by [deleted] »

jvehent wrote: post #8
zanst wrote: post #6

Earlier quoted context omitted.

I think you're wrong, because "social media" is not a bubble. Actually, it's part of the real life. :-) And I don't know what Warren wants with this, maybe he's believing in another monopolistic move of IBM, which is not too smart these days.

Actually, I agree with you on the benefits from social media to the society. But for 5% of useful features, there is 95% of trendy/fashionable projects that do not have any benefits to the grand scheme of things, are really expensive (color?) and are driving workforce away from more important projects.

[deleted]

Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#23

Post by noahc »

gaius wrote: post #16
barry-cotter wrote: post #14

Earlier quoted context omitted.

IBM's business model is approximately "We will solve your problems for piles and piles of money. Usually not problems that require technical breakthroughs or research level computer science knowledge, but ill-defined problems that involve many stakeholders, much politics, and complex business logic." They make their money as a professional services company (a model Buffett has no trouble understanding) that uses tech…

That is IBM Global Services, which is basically the same as Accenture, Cap Gemini, Wipro etc, IT outsourcing/offshoring. It's about half of IBM, by revenue.

Even so IBM's business model when they are not selling wetware involves selling expensive black boxes that are maintained, installed, and serviced by expensive wetware. Even though it makes up half of revenue, that doesn't mean the other half is not directly related to driving business to the wetware side.

I think the business model outlined above is correct in the global strategy sense, even if you looking at a few pie graphs makes you think otherwise.

Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#24

Post by pagejim »

jvehent wrote: post #2

Invest in companies that are actually producing something valuable. That's the way to restart the economy. Can we all move on from the social media bubble and get back to real work now ?

Perhaps it would be helpful for all, if you could specify what in your opinion is "real Work"? We're all here to share views and we could learn something from what is at the back of your mind.

Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#25

Post by loumf »

icki wrote: post #3

I wonder how much of it has to do with their new 3d semiconductors [1]. These things seem ideal for dedicated servers and the like. [1] http://www.youtube.com/watch?feature=player_embedded&v=r...

Buffett usually doesn't care about stuff like this. He cares about profitable business models that throw off a lot of cash in dividends. He uses those to make big infrastructure investments for long term continuous cash (like utilities). His letters to shareholders lay out his strategy in very plain language.

Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#26

Post by martinkallstrom »

icki wrote: post #3

I wonder how much of it has to do with their new 3d semiconductors [1]. These things seem ideal for dedicated servers and the like. [1] http://www.youtube.com/watch?feature=player_embedded&v=r...

Very little or a lot, depending on your perspective. Long term investments look at strong projections and long term development, not in a single technology with high risk. But projects like the one you refer to is certainly proof of a strong and competitive R&D capability, which is something to invest in.

Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#27

Post by wladimir »

barry-cotter wrote: post #14
bobbles wrote: post #10

From what I undersand, Buffet has always avoided technology companies because he believe he didn't understand them well enough in order to invest. Someone at IBM must have changed his mind?

IBM's business model is approximately "We will solve your problems for piles and piles of money. Usually not problems that require technical breakthroughs or research level computer science knowledge, but ill-defined problems that involve many stakeholders, much politics, and complex business logic." They make their money as a professional services company (a model Buffett has no trouble understanding) that uses tech…

problems that require technical breakthroughs or research level computer science knowledge,

They're not just a plain boring services company.

I'm sure that quite a lot of research went into Watson, and I think IBM is betting big on that technology. Potential applications are in healthcare (to quickly find an answer in all medical knowledge), legal documents analysis, and so on.

Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#28

Post by mark_l_watson »

IBM has made some very good decisions, in particular realizing that huge amount of money that can be made in expert solve any problem services and sought to make infrastructure a cheap commodity so companies could spend more on services (i.e., investment in open source). So smart, and something I would never have been able to figure out without hind site.

Re: Buffett Says Berkshire Has Bought About $10.7 Billion in IBM

#30

Post by martinkallstrom »

forensic wrote: post #29
martinkallstrom wrote: post #22

Even more interesting: what IT stocks did he sell to put the money in IBM?

I thought Berkshire doesn't invest in IT?

True (until now, I assume). But they must have liquefied some holdings, or did they front the cash for a $10B stake? It tops most of their existing holdings like $5B in Proctor & Gamble and $2B in Wal-Mart (which are some of the largest holdings they have on hand).
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