IBM is the new benchmark in bad
Poor execution and slow growth lead to a poor quarter for Big Blue.
We've got it -- the new benchmark in bad: IBM (IBM).
I don't know if you could have blown a quarter as badly as IBM did if you tried. This is not the first time this has happened -- or the second, or the third. In fact, as the always-rigorous Tony Saconaghi -- one of my favorite tech analysts -- pointed this out as part of the open rebellion on the conference call: "You've missed consensus revenue expectations for seven quarters."
This most recent one was by far the worse miss of them all. As Tony pointed out on the call: "If it weren't for a huge tax benefit this quarter, it would have been a very significant earnings-per-share miss." He then added that something very different is occurring at the company from what has been the case in the last seven to eight years.
Here's the problem: I felt IBM had no answer to Tony's inquiry, or to any of the others on the call. The company admitted to poor execution and a slowing in all growth markets and miserable hardware sales, but we don't know why. It is entirely possible that cloud computing is just killing these guys. They attempted to make the cloud into a positive for them by saying that the company's doing $1 billion in cloud revenue.
That's pretty laughable, as it's the same amount little Salesforce.com (CRM) is doing -- except that IBM is a company with $100 billion in revenue. The drop-off here was shocking. Sales generated in China were down 22 percent, and hardware revenue was down 40 percent in the fastest-growing market. That's a true indictment of the enterprise.
In fact, the only division I felt was positive at all was security.
That's very discouraging. This company's not even doing as well as Hewlett-Packard (HPQ).
I hesitate to regard this company as a bellwether of anything, although I am sure that will occur Thursday. If anything, I think it is carrion for other, more aggressive companies. While there were currency issues that were endlessly discussed by management, I am calling this one a disaster.
I know Warren Buffett bought big into IBM, although he sure didn't have anything all that positive to say about it in his Wednesday interview with CNBC's Becky Quick. Regardless, when I look at his Berkshire-Hathaway (BRK.A) portfolio, I think this one is by far the weakest holding. I'll be shocked if he sticks with it.
As with HP, the declines here are both cyclical and secular. Unlike HP, the company seems oblivious to exactly how bad things are.
Again, just a breathtakingly bad quarter. Not much else to say.
Random musings: If you want a terrific contrast between two commerce companies, listen to American Express (AXP) vs. eBay (EBAY). American Express had a terrific quarter with good business throughout, particularly in America. Meanwhile, eBay saw a "dramatic deceleration" in its American business, worse by the week, going right into the fourth quarter. Buy AmEx, sell eBay.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the securities mentioned.
More from TheStreet.com
Personally I'm NOT THANKING WASHINGTON particularly Congress, for ANYTHING....
They have not done their JOB, they have not finished their BUSINESS...
Anyone else can do what they want, but I think they need their azz kicked; And kicked hard..!!
I believe the furloughed Fed workers, should all work 1-2 hours of overtime (OT) per day until they pay off the VACATION monies they are going to get....(for being off)
Otherwise other fellow taxpayers, and all other Americans are just getting screwed..
Now I know what its like to fear the future.
Off Topic....lets all gather and thank the Congress for finally
breaking the stalemate that could have been broken several
weeks (or even months) ago. What a fine bunch of workers
they are, and all about the "American People". After intense
audit as to the number of hours worked, they certainly proved
they are worth at least minimum wage at best.
Have a great day with Fed workers (the real ones, that is)
'back on line'....
You can sit around and piss and moan about IBM....
If you are one of their investors, you might have a little reason to, because they are dragging the DOW down today....If any of you have invested in Blue in the past, you probably have been handsomely rewarded.
IBM is like AT&T, GE and other stalwart companies that time and time again, manage to muddle or come through the worst of times, the best of times...I wouldn't be counting them out; Because they aren't even laying on the mat yet...
Most of these Companies, deserve much praise for what they have accomplished over the decades, they have changed the World....And they have made America and Americans what they are today.
And they are NOT going to fold and go away anytime soon.
LOST YOUR BACK !!!!!!!!! Do they know you're using the computer at the insane asylum?
Amongst other things or issues...
Someone mentioned about McCain being a traitor to his Country....
I really wish I could sit down and talk to you man to man or man to woman...
Whoever you were...
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.