Author Topic: Why Warren Buffett Keeps Buying IBM  (Read 2395 times)

berkshiremystery

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Why Warren Buffett Keeps Buying IBM
« on: January 08, 2013, 02:51:38 PM »
Why Warren Buffett Keeps Buying IBM
2013-01-08 Forbes.com

Buffett said in Nov. 2011 on NBC when he announced owning a stake in the company that “he would not be announcing it if he were not pretty much done” buying shares. But over the next 3 qtr's he has found the stock attractive enough to continue buying, making it the 2nd most-bought stock in his portfolio, and causing investors to ask why.

IBM consistently uses “Road Maps:
· $50 billion in share repurchases
· $20 billion in dividends
· $20 in EPS (non-GAAP)
· $100 billion in free cash flow
· $20 billion spending on acquisitions
· Software becoming about half of segment profit

http://www.forbes.com/sites/gurufocus/2013/01/08/why-warren-buffett-keeps-buying-ibm/

« Last Edit: January 08, 2013, 02:58:46 PM by berkshiremystery »


hellsten

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Re: Why Warren Buffett Keeps Buying IBM
« Reply #1 on: January 08, 2013, 03:22:22 PM »
Why Warren Buffett Keeps Buying IBM
2013-01-08 Forbes.com

Buffett said in Nov. 2011 on NBC when he announced owning a stake in the company that “he would not be announcing it if he were not pretty much done” buying shares. But over the next 3 qtr's he has found the stock attractive enough to continue buying, making it the 2nd most-bought stock in his portfolio, and causing investors to ask why.

IBM consistently uses “Road Maps:
· $50 billion in share repurchases
· $20 billion in dividends
· $20 in EPS (non-GAAP)
· $100 billion in free cash flow
· $20 billion spending on acquisitions
· Software becoming about half of segment profit

http://www.forbes.com/sites/gurufocus/2013/01/08/why-warren-buffett-keeps-buying-ibm/

To me this is the relevant part:
Quote
Buffett in his CNBC interview noted that companies are reluctant to change their IT suppliers and as companies around the world look for companies to develop their IT departments, they are likely to turn to a trusted and iconic name like IBM.

You could also simply say "nobody ever got fired for buying IBM":
http://en.wikipedia.org/wiki/Fear,_uncertainty_and_doubt#Definition

In other words, IBM has a franchise and a wide moat:
http://www.youtube.com/watch?v=CYYmjadvkb4#t=388s

My guess is that Warren would have bought Microsoft instead of IBM if he wasn't a friend of Mr. Gates.

constructive

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Re: Why Warren Buffett Keeps Buying IBM
« Reply #2 on: January 09, 2013, 07:45:17 AM »
My guess is that he might have bought Accenture or Infosys if he had 5 decades to get comfortable with their business, like he has with IBM.