Andrew Neff wrote most of today's report cutting his rating on International Business Machines Corp. yesterday -- hours before Chief Executive Louis Gerstner spoke at IBM's bi-annual analyst meeting in Manhattan.
Gerstner might have changed Neff's mind, the Bear, Stearns & Co analyst says. He didn't.
Neff lowered his rating on the biggest computer maker to "attractive" from "buy," his first change of opinion on IBM in three years. IBM shares, up 32 percent so far in 2001, are getting close to historical highs relative to earnings, and sales in the year's second half aren't likely to match last year's growth, he wrote in the report.
"We wanted to see if there would be anything said to cause us to think differently" at the conference, Neff said in an interview. "What if they said that business is wonderful?"
Neff was the only analyst to change his rating among 11 Wall Street analysts who published reports on IBM yesterday, according to Bloomberg data. Others reiterated their previous opinions. Of 25 analysts that cover IBM, 21 rate the company a "buy" and four rate it a "hold."
Addressing about 400 analysts and investors in a basement auditorium in the Equitable building, Gerstner said IBM is concentrating on cash flow, earnings growth and market share, rather than revenue growth. He spoke about growth in computer networks and the devices linked to them. Gerstner and other IBM executives have made similar remarks before. He avoided speaking about the company's financial status.
"We either had to come out of the meeting and raise the price target or lower the rating," said Neff, who is ranked No. 3 among personal computer hardware analysts in Institutional Investor magazine's 2000 annual survey. "We didn't see any reason to raise the price target." He left his stock price forecast at US$120. IBM on Friday fell US$3.39 to US$111.81.
Neff, 44, divides technology stocks into "six buckets of value," he wrote in the report. He puts IBM in the "old growth" bucket, which means he uses price-earnings ratios relative to the market as a valuation tool.
IBM has typically peaked at a 20 percent premium to the S&P's 500 Index, he wrote, and is now trading at a 10 percent premium. That limits the chance of its stock price rising much further, he said.
The stock now trades at 25 times Neff's 2001 earnings estimate of US$4.60 a share, while companies in the S&P 500 trade at 22.7 times next year's earnings, he said. His IBM earnings estimate is below the US$4.85 a share analyst consensus, according to First Call/Thomson Financial Neff. Neff said he has a more ``conservative'' estimate based on demand for PCs, ``slightly disappointing'' new service signings in the first quarter and a challenging economic environment.
EXPRESSING GRATITUDE: Without its Taiwanese partners which are ‘working around the clock,’ Nvidia could not meet AI demand, CEO Jensen Huang said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and US-based artificial intelligence (AI) chip designer Nvidia Corp have partnered with each other on silicon photonics development, Nvidia founder and CEO Jensen Huang (黃仁勳) said. Speaking with reporters after he met with TSMC chairman C.C. Wei (魏哲家) in Taipei on Friday, Huang said his company was working with the world’s largest contract chipmaker on silicon photonics, but admitted it was unlikely for the cooperation to yield results any time soon, and both sides would need several years to achieve concrete outcomes. To have a stake in the silicon photonics supply chain, TSMC and
IDENTITY: Compared with other platforms, TikTok’s algorithm pushes a ‘disproportionately high ratio’ of pro-China content, a study has found Young Taiwanese are increasingly consuming Chinese content on TikTok, which is changing their views on identity and making them less resistant toward China, researchers and politicians were cited as saying by foreign media. Asked to suggest the best survival strategy for a small country facing a powerful neighbor, students at National Chia-Yi Girls’ Senior High School said “Taiwan must do everything to avoid provoking China into attacking it,” the Financial Times wrote on Friday. Young Taiwanese between the ages of 20 and 24 in the past were the group who most strongly espoused a Taiwanese identity, but that is no longer
A magnitude 6.4 earthquake and several aftershocks battered southern Taiwan early this morning, causing houses and roads to collapse and leaving dozens injured and 50 people isolated in their village. A total of 26 people were reported injured and sent to hospitals due to the earthquake as of late this morning, according to the latest Ministry of Health and Welfare figures. In Sising Village (西興) of Chiayi County's Dapu Township (大埔), the location of the quake's epicenter, severe damage was seen and roads entering the village were blocked, isolating about 50 villagers. Another eight people who were originally trapped inside buildings in Tainan
SHARED VALUES: The US, Taiwan and other allies hope to maintain the cross-strait ‘status quo’ to foster regional prosperity and growth, the former US vice president said Former US vice president Mike Pence yesterday vowed to continue to support US-Taiwan relations, and to defend the security and interests of both countries and the free world. At a meeting with President William Lai (賴清德) at the Presidential Office in Taipei, Pence said that the US and Taiwan enjoy strong and continued friendship based on the shared values of freedom, the rule of law and respect for human rights. Such foundations exceed limitations imposed by geography and culture, said Pence, who is visiting Taiwan for the first time. The US and Taiwan have shared interests, and Americans are increasingly concerned about China’s
RSS