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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

#31

Post by bobbles »

noahc wrote: post #19
leyfa wrote: post #12

Earlier quoted context omitted.

Revealing my ignorance on this topic: Why would IBM care who owns their stocks, assuming the specific shareholder doesn't try to take influence on the development/direction of the company?

They don't. The parent is wrong in suggesting someone 'convinced' Buffet. Because of the herd mentality around investing who invests in you does matter, but not for this discussion.

I didnt say convinced so you shouldnt really quote it like that. But then I didnt really mean it that way either.

I was thinking more along the lines of Buffet talked with people at IBM and realised that he understood the way they operated.

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

#32

Post by jonknee »

martinkallstrom wrote: post #30
forensic wrote: post #29

Earlier quoted context omitted.

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).

BRK has a mountain of cash, they did not need to sell off stocks to buy shares of IBM.

http://www.google.com/finance?q=NYSE:BRK.A&fstype=ii

(As of the last quarter they had nearly $35b in Cash & Equivalents.)

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

#33

Post by pagehub »

I am involved with IBM quite a bit as we are through to the final of their Smartcamp competition.

I have been so impressed by the way they deal with small businesses, always looking to form mutually beneficial partnerships to fill in gaps in their service offering, giving small companies access to huge markets they would normally have no chance of entering.

Really excited about their future, think the best is yet to come.

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

#35

Post by gaius »

noahc wrote: post #23
gaius wrote: post #16

Earlier quoted context omitted.

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…

IBM GS is tech-agnostic; they don't just implement IBM mainframe solutions, they'll take your money to do SAP, Oracle, whatever you want, same as any of the other bodyshops.

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

#36

Post by noahc »

bobbles wrote: post #31
noahc wrote: post #19

Earlier quoted context omitted.

They don't. The parent is wrong in suggesting someone 'convinced' Buffet. Because of the herd mentality around investing who invests in you does matter, but not for this discussion.

I didnt say convinced so you shouldnt really quote it like that. But then I didnt really mean it that way either. I was thinking more along the lines of Buffet talked with people at IBM and realised that he understood the way they operated.

He never met with the CEO[1] and in fact messed up the name.

It is in the realm of possibility (and quite likely) that he talked with people inside IBM. But I don't think they were really pushing for him to buy it. At least it doesn't appear that way.

[1]http://tech.fortune.cnn.com/2011/11/14/warren-buffett-ibm/

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

#37

Post by nolok »

mark_l_watson wrote: post #28

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.

>hind site

hindsight

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

#38

Post by dereg »

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 ?

Hmm, so reallocating a few billion dollars is going to fill the multi-trillion dollar output gap we've fallen into these past few years? No, the answer is no.

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

#39

Post by ma2rten »

pagehub wrote: post #33

I am involved with IBM quite a bit as we are through to the final of their Smartcamp competition. I have been so impressed by the way they deal with small businesses, always looking to form mutually beneficial partnerships to fill in gaps in their service offering, giving small companies access to huge markets they would normally have no chance of entering. Really excited about their future, think the best is yet to…

Like they did with microsoft?

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

#40

Post by nknight »

6sigma wrote: post #5

FWIW, IBM is more expensive on a PE basis, trading at trailing PE of 14 compared to Microsoft's PE of 9.8.

Hint: Watching CNBC doesn't make you a good investor, and throwing around the letters "PE" just makes you look like the worst kind of shallow, ignorant investor.

No experienced investor bases stock purchasing decisions off P/E ratio alone or even primarily, because the metric has absolutely no intrinsic meaning.

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