Is This The Scariest Chart In IBM's History?

Tyler Durden's picture

Moments ago IBM reported revenues and EPS that both beat expectations and yet the stock is sliding after hours. We may have an idea why, and it has to do with the scariest chart in IBM's history, which we first revealed three months ago and which just got scarier.

It's not this chart of IBM's ninth consecutive decline in revenues, which was scary enough in its own right:


Nor this chart showing the ridiculous amounts of money IBM has spent each quarter on artificially boosting its EPS through stock buybacks, reducing the total number of Big Blue shares to below 1 billion for the first time in years:


Or this chart showing that every dollar of debt IBM has raised since 2012 has gone toward buying back stock and then some:


Nor even this chart showing that the Net Debt of IBM has risen by a ludicrous 55% in the past year to a record $36.8 billion (but... but... record cash on the sidelines)...

It is this chart, indicating that as of Q2, IBM had a higher total debt/equity ratio than just after the Lehman collapse and, after last quarater's already record high ratio.

One of these days even the criminally corrupt and always amusing chimps at S&P and Moody's will finally have to notice what is going on here.

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Raymond K Hessel's picture

Yawn...  this analysis can be applied to other DJIA companies.  

When do we fight?  When does the revolution begin so we can hit the reset button?


P R O J E C T   M A Y H E M ! ! !

SWRichmond's picture

Equity = ownership

Debt = owing "money"

So if I can convert "Debt" into "Equity", when would I want to do that? 

A: When I knew that the denomination of the "debt" was about to be made meaningless, but the "ownership" would remain, even after the currency explosion.

cifo's picture

Suspenseful articol...

Dollarmedes's picture

Obama already investigated Standard & Poor's for the U.S. encourage the others.

Who's gonna downgrade too big to fail cronyist companies now?

villainvomit's picture

yeah, Sean Eagan got bit before Standard.  Eagan Jones appeared to me a step ahead of most folks, but maybe because they were paid by end users and not the issuers.

Abi Normal's picture

Follow the money.

It is some scarey stuff, shit that legends are made from, good and bad. 


We live on the razor's edge, led by malintents and incompitence!

old naughty's picture

During his rein from 1956 to 1971, Thomas Watson, Jr. grew revenue more than 9-folds and number employess almost 4-folds.

Today, I doubted even him cares about Big Blue. 

Gone were the days of the exceptional American entrepreneurships.

SAT 800's picture

It was a burecracy in 1979 on the scale and with the effeciency of the US Army. It's just a dying dinosaur; a left over from a previous business climate.

Sages wife's picture

Clever.  And realistic.  Life imprisonment for everyone?  Pounds of flesh?  I think you're right on the money.  Takes balls though.

StormShadow's picture

Michael Milken and Bernie Madoff look like altar boys compared to the regular, repeated, daily theft now taking place on Wall Street. There simply are not enough lamp posts when this all unravels....

Mabussur's picture

I just came up with lamp post extensions that allow to hang more bankers per post. Who said american entrepreneurship is dead ? You just have to be where the demand is / will be.

SAT 800's picture

Ownerhsip of what? It's a buggy-whip company; it's just another Blockbuster. It's so over; it's ridiculous. they're out of it, behind the curve, lost in the undergrowth; clueless and dying. Another digital dinosaur.

disgruntled housewife's picture

Very good.  One of the best comments I have seen.  Nice to see critical thinking at work.

disgruntled housewife's picture

Very good.  One of the best comments I have seen.  Nice to see critical thinking at work.

Monty Burns's picture

IBM's doom was sealed when the financial engineers took over from the computer engineers.

t0mmyBerg's picture

Yes and as goes IBM so the Market, and probably the country.

matrix2012's picture

"IBM's doom was sealed when the financial engineers took over from the computer engineers."

It's an oxymoron to put both the Financial and Engineer into one single term. It can't be.

hardmedicine's picture

the things you own end up owning YOU!

Flagit's picture

In USSA, money puts YOU in bonds!

tempo's picture

this results from fed zirp, there is no need to spend cash on capex., robots and part timers will replace most full time employees except for the 500 million $ CEO.

Jumbotron's picture

You may want to read this expose on IBM and its future by this guy.  Frightening stuff for IBM if true.

Here's another interesting tidbit....

Jumbotron's picture

Since everyone is white-boxing their internal servers and cloud infrastructures.....IBM is down to peddling Watson (the cognitive supercomputer that won at Jeopardy) as a service.

The Econ Ideal's picture

Watson is a supercomputer, but cognitive? It cannot think. Narrow expert system that won one Jeopardy! match...IBM is down to peddling Watson as a barbeque sauce recipe builder. 

in4mayshun's picture

IBM should abandon traditional business and focus on collecting information for CIA/NSA/FBI. It seemed to work out for Facebook and Google.

StormShadow's picture

I'm thinking they just need to re-open the W.O.P.R. line...think we're gonna be better off with computers making the decisions than the neocon assclowns are now. Do you want to play a game?

terex's picture



as !n Buffet

sof_hannibal's picture

what does IBM even do now a days anyways to make money? the cloud? consulting?

sleigher's picture

IBM owns the full stack. HW/OS/DB/App layers.  This is kind of the reason Oracle bought Sun.  So they can compete with a full stack.  Hardware, OS, DB, App.  Oracle was missing the hardware/OS so Sun was probably an ok buy for them except it killed Sun which sucked.


Lots of PHB's out there who want one throat to choke.

svayambhu108's picture

|what does IBM even do now a days anyways to make money?

same as Intel making shit up...


dochood's picture

They charge their poor mainframe customers by the MIPS (Millions of Instructions Per Second) for every little thing.  Lots of companies still have mainframes running software that is decades old.  Companies are desperate to get their data off mainframes, but IBM has mastered lock-in to a level that makes Bill Gates cry with envy.

Monty Burns's picture

Oracle destroys very company it takes over.

Boomberg's picture

IBM is holding on to the back of the life raft filled with Fortune 100 banks, insurance companies, and other staid lines of business who still view IBM as solid, low risk IT providers albeit at premium prices with no innovation. Even these corporations are fed up with products that fail to live up to hype and are moving to low cost open source options which are proving to be reliable enough to run the business with no headaches. (IT is a necessary evil not the end game). IBM hypes Watson which is proprietary, expensive and is hidden from customers inside IBM's data centers. I suspect it's nothing but a Google screenscraper. The IBM business model, lack of innovation,  and sense of entitlement attitude with the Fortune 100 is spelling their doom.

Scarlett's picture

NSA is their biggest problem--and perhaps customer!

max2205's picture

So what....they got 200 year low interest rates on bonds to finance the buybacks


IBM makes their numbers because the GSA will always send them a PO when they might need to cover a shortfall

SAT 800's picture

It's a great short. sooner or later even the semi-conscious "planners" playing with other peoples money start waking up and smelling the coffee. Let's put it this way; how long can they keep buying back stock? Not much longer, right. Great Short.

Its_the_economy_stupid's picture

longer than I can stay solvent

MsCreant's picture

Strange doings with posts appearing and disappearing. Mine was a duplicate, but now not.

IBM bankrupt? Hmmm... TBTF or TBTbail?

SAT 800's picture

It's not a TBTF institution, Ms. Creant, and by the way, I usually enjoy your posts, it'll just be another dead Corporation. Like Blockbuster, for instance. It's a great Short Sale, though.

NOTaREALmerican's picture

Looks like 3 quarters of revenue improvements means IBM is turning the corner as synergies align with corp-competencies. 

I'd say this a strong buy.

oudinot's picture

IBM: Another dinosaur on borrowed (pun intneded) time

Dr.Engineer's picture

A great company brought down by narcissistic psychopaths who only looked out for their stock options.

I worked there for 8 years.

The lives of many good people were ruined by these criminals.

divedivedive's picture

I was there for almost 10 years (contractor/employee). I have a lot of friends who were 'pushed out' (for what reason I have no idea - some of these people had true genuis - collectively we have many patents).

I was lucky that when the time came to leave (my choice) a) we were both working and b) we lived very frugally. We threw caution to the wind and doubled my salary one year after leaving IBM (not to mention the successful startup I ended up at). Lots of nice people. 

On topic : we own some IBM bonds and  they recently offered to cash them out. Now it is true that that may be because they would like to restructure their debt to lower yielding bonds (or something).

Peak Finance's picture

I remember a visit to Thomas J Wattson center when I was in college. It was like visiting the holy land! There was shit there we could not even imagine at the time, gigabit networking, full life like rendered 3d-graphics, cool weather modeling stuff, Real-time 3d software model of the ozone hole (remember that? LOLZ)

Terrible shame what happened to them. I wonder where all that raw IQ ended up going? 

divedivedive's picture


I was/am  little more than a grunt programmer. When I announced my intentions to leave they tried to find a better place for me. They sent me to 'another' (not watson) research lab to see if I would fit in. I met some incredibly intersting people. I didn't appreciate everything at the time but I think I met the guy who invented the 3D printer - he certainly had one at his avail (and that would have been about 15 years ago).