• Knave Dave
    05/23/2016 - 18:16
    This past Thursday marked the one-year anniversary of the US stock market’s death when stocks saw their last high. Market bulls have spent a year looking like the walking dead. They’ve...

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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Thu, 07/17/2014 - 17:48 | 4970318 svayambhu108
svayambhu108's picture

HAL

Thu, 07/17/2014 - 17:55 | 4970362 Raymond K Hessel
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 ! ! !

Thu, 07/17/2014 - 17:56 | 4970370 Groundhog Day
Groundhog Day's picture

Ludicrous speed

Thu, 07/17/2014 - 18:27 | 4970505 SWRichmond
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.

Thu, 07/17/2014 - 18:35 | 4970546 cifo
cifo's picture

Suspenseful articol...

Thu, 07/17/2014 - 18:56 | 4970672 Dollarmedes
Dollarmedes's picture

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

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

Thu, 07/17/2014 - 19:32 | 4970845 villainvomit
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.

Thu, 07/17/2014 - 20:18 | 4971110 Abi Normal
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!

Fri, 07/18/2014 - 04:29 | 4972308 old naughty
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.

Fri, 07/18/2014 - 06:15 | 4972404 StormShadow
StormShadow's picture

He didn't build that....

Fri, 07/18/2014 - 06:54 | 4972455 SAT 800
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.

Thu, 07/17/2014 - 21:44 | 4971515 Sages wife
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.

Fri, 07/18/2014 - 06:41 | 4972408 StormShadow
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....

Fri, 07/18/2014 - 09:29 | 4972867 Mabussur
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.

Fri, 07/18/2014 - 06:52 | 4972451 SAT 800
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.

Fri, 07/18/2014 - 10:32 | 4973206 disgruntled hou...
disgruntled housewife's picture

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

Fri, 07/18/2014 - 10:32 | 4973208 disgruntled hou...
disgruntled housewife's picture

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

Thu, 07/17/2014 - 18:24 | 4970482 Monty Burns
Monty Burns's picture

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

Thu, 07/17/2014 - 20:59 | 4971309 t0mmyBerg
t0mmyBerg's picture

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

Fri, 07/18/2014 - 07:40 | 4972546 matrix2012
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.

Thu, 07/17/2014 - 19:30 | 4970838 hardmedicine
hardmedicine's picture

the things you own end up owning YOU!

Thu, 07/17/2014 - 20:58 | 4971301 Flagit
Flagit's picture

In USSA, money puts YOU in bonds!

Thu, 07/17/2014 - 18:55 | 4970670 tempo
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.

Thu, 07/17/2014 - 19:11 | 4970742 Jumbotron
Jumbotron's picture

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

http://www.cringely.com/2014/06/04/decline-fall-ibm/

Here's another interesting tidbit....

http://geldred.com/2013/04/29/cringely-the-decline-and-fall-of-ibm/

Thu, 07/17/2014 - 19:13 | 4970763 Jumbotron
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.

Thu, 07/17/2014 - 21:36 | 4971486 The Econ Ideal
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. 

Thu, 07/17/2014 - 19:25 | 4970820 in4mayshun
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.

Fri, 07/18/2014 - 06:22 | 4972415 StormShadow
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?

Fri, 07/18/2014 - 08:39 | 4972695 terex
terex's picture

No...

B U F

as !n Buffet

Thu, 07/17/2014 - 17:49 | 4970326 sof_hannibal
sof_hannibal's picture

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

Thu, 07/17/2014 - 17:58 | 4970356 sleigher
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.

Thu, 07/17/2014 - 18:07 | 4970411 svayambhu108
svayambhu108's picture

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

same as Intel making shit up...

 

Fri, 07/18/2014 - 09:19 | 4972813 dochood
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.

Thu, 07/17/2014 - 18:26 | 4970493 Monty Burns
Monty Burns's picture

Oracle destroys very company it takes over.

Thu, 07/17/2014 - 22:09 | 4971621 Me.Grimlock
Me.Grimlock's picture

You misspelled "Symantec"

Fri, 07/18/2014 - 06:24 | 4972416 StormShadow
StormShadow's picture

Oracle=Sauron

Thu, 07/17/2014 - 18:01 | 4970384 Boomberg
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.

Thu, 07/17/2014 - 18:10 | 4970421 Scarlett
Scarlett's picture

NSA is their biggest problem--and perhaps customer!

Fri, 07/18/2014 - 06:15 | 4972401 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

IBM's glorious days of providing logistics to the Nazis for the Holocaust appear to have passed them by. Evidently, there isn't much money to be made in ethical and humane behavior.

Thu, 07/17/2014 - 18:11 | 4970429 max2205
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

Fri, 07/18/2014 - 07:07 | 4972477 SAT 800
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.

Fri, 07/18/2014 - 07:34 | 4972537 Its_the_economy...
Its_the_economy_stupid's picture

longer than I can stay solvent

Thu, 07/17/2014 - 18:08 | 4970328 MsCreant
MsCreant's picture

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

IBM bankrupt? Hmmm... TBTF or TBTbail?

Fri, 07/18/2014 - 07:09 | 4972484 SAT 800
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.

Thu, 07/17/2014 - 17:50 | 4970334 NOTaREALmerican
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.

Thu, 07/17/2014 - 20:26 | 4971149 MeelionDollerBogus
MeelionDollerBogus's picture

smart'n'savvy machines corp!

Thu, 07/17/2014 - 17:51 | 4970336 oudinot
oudinot's picture

IBM: Another dinosaur on borrowed (pun intneded) time

Thu, 07/17/2014 - 17:52 | 4970338 Dr.Engineer
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.

Thu, 07/17/2014 - 18:41 | 4970566 divedivedive
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).

Thu, 07/17/2014 - 19:19 | 4970792 Peak Finance
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? 

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