IBM's 1Q09 Financial Results

Highlights of IBM's 1Q09 Earnings Report:

* Net Income: $2.3 Billion or $1.70/share...down less than 1% from $2.32 Billion in 1Q08

* Total Sales: $21.7 Billion...down 11% from $24.5 Billion in 1Q08 (IBM stated that revenue would have only dropped 4% year over year under constant currency)

* Total Expenses: $6.3 Billion...down 9% from 1Q08

* Effective Tax Rate: 26.5%...down 100 basis points from 27.5% in 1Q08

* Free Cash Flow: $1 Billion...up 80% year over year (yoy) from $550 million

* Stock Buyback: IBM purchased 22 million shares of its own stock during 1Q09 (at 4/26/09's price of $100/share, IBM purchased approx $2.2 Billion of company stock during the quarter)...IBM currently has $3.7 Billion of share buyback authorization remaining

* CASH on hand to end 1Q09: $12.3 Billion

* Service Sales: $13.2 Billion...down 10% yoy (down 2% at constant currency)

* Software Sales: $4.5 Billion...down 4% yoy (up 2% under cc)

* Hardware Sales: $3.2 Billion...down 24% yoy (down 18% under cc)

* 1Q09 Service Bookings: Down 1% yoy to $12.5 Billion (IBM stated that new service contracts revenue would have actually risen 10% yoy under cc)

* Long-Term Service Bookings: Up 14% yoy to $7.0 Billion (up 27% under cc)

* Short-Term Service Bookings: Down 14% yoy to $5.5 Billion (down 5% under cc)

* India sales up 12% year over year

* China sales up 11% year over year


* 2009 Forecast: IBM affirmed its 2009 earnings forecast of at least $9.20/share (...as of 4/26/09, IBM traded at $100.08/share, implying its currently trading at a forward 2009 P/E multiple of approx 11 times earnings)


* 2010 Forecast: IBM affirmed its 2010 earnings forecast of in between $10-$11/share (...as of 4/26/09, IBM traded at $100.08/share, implying its currently trading at a forward 2010 P/E multiple of approx 9-10 times earnings)


http://www.ibm.com/investor/1q09/press.phtml


Data Courtesy: IBM's 1Q09 earnings press release
Full Disclosure: I own shares of IBM.

SOROS - 'Two Moves' And Only A Bear Rally ?

Say what you want about BILLIONAIRE George Soros and what you may perceive his influence on U.S. party politics may (or may not) be, the truth is that few market participants have been as RIGHT (pun INtended) as the founder of Soros Fund Management when it comes to sound investment decision-making post the mid 2007 credit/mortgage bubble collapse. While the S+P 500 market index lost a sickening 39% in 2008, Mr. Soros astutely spent the year mostly betting against the volatile global markets and actually ended 2008 up 8% (FYI, the average hedge fund declined 19% in 2008). Through February 2009, Mr. Soros' management firms oversaw $21 Billion and its Quantum Endowment hedge fund was up 5.3% on the year.

Given his recent high-level of market 'RIGHT-eousness' (a technical term I coined for being right about the markets), Mr. Soros' interviews now approach those starring former Oppenheimer & Co. banking industry analyst, Mrs. Meredith Whitney, when it comes to being officially REQUIRED Viewing Material ('RVM'). In the below twenty five minute segment, Mr. Soros shares his valuable insight on several relevant, pressing financial market TOPICS including: The S+P 500's ongoing rally off its twelve year lows on March 9th, 2009 (the 27% gain is the largest percentage-based rally for the S+P 500 since 1933)...FASB's recent controversial decision to alter the definition of Mark-to-Market accounting (this will effectively allow U.S. banks to have much more accounting flexibility, or 'creative freedom', when it comes to judging the balance sheet value of their own notoriously large securitized asset loan portfolios including those distressed assets levered to residential and commercial real estate)...The current state of the U.S. financial system and the fundamentally insolvent state of affairs surrounding its largest 'zombie banks' including Citigroup (C) and Bank Of America (BAC)...Thoughts on the timing of a potential U.S. housing bottom...Global economic recovery thoughts focused on B.R.I.C. countries Brazil and China, ETC. :






Data Courtesy: Youtube + Bloomberg

Australia's $30 Billion BROADBAND Project

While some of the major details are still evolving (...for instance, whether or not Australia will hire private-sector multinational IT companies like Cisco/CSCO, Siemens/SI, IBM, or even Google/GOOG to help out), Australia's government recently committed to a highly ambitious eight-year, $30.5 Billion Internet infrastructure spending project that will aim to significantly boost the country's current broadband network capacity and also, preserve 200,000 Australian JOBS. Per Australia's Prime Minister, Kevin Rudd, the country's LARGEST EVER infrastructure project to date "will support 25,000 jobs every year over the eight-year life of the project", and will also provide citizens with Internet access 100 times faster than currently available speeds.


Some additional bullet points:
* The Australian government plans to form and temporarily own 51% of the new company that will be responsible for making the initial investments of approx $3.4 Billion in order to build and operate the new high-speed Internet network...The government plans to sell its stake in the company five years after the project's completion


* In order to FINANCE the entire $30 Billion undertaking, the government currently plans to sell up to $16 Billion in BONDS to the public and also plans to raise $14.3 Billion via 'private (equity) investment'


* The plan's seemingly earnest objective is to supply 90% of Australian homes with Internet connections of up to 100 megabits per second and the remaining 10% with speeds of up to 12 megabits per second


* According to JPMorgan's Chase & Company's Internet Investment Guide, about 17% of Australia's population had access to high-speed Internet connections in 2008 (this rate compares to 19% in both the U.S. and Japan...and also to 26% in both South Korea and Switzerland)


* Australia's unique geography (many cities densely located on its coast, the sparsely-populated Outback) has made Broadband advancement a difficult issue in the past


* Kevin Rudd, Australia's Prime Minister, made Broadband infrastructure expansion a priority during his 2007 political campaign...According to Reuters, Rudd's current popularity is near-record levels in domestic opinion surveys


* In addition to the $30 Billion (43 Billion Australian dollars) pledged to stimulate Australia's economy via this massive Broadband plan, Australia's government has pledged approx $57 Billion (78 Billion Australian dollars) in economic stimulus since September 2008 (the now infamous date marking the collapse of the artist formerly known as Lehman Brothers)



bloomberg.com/apps/news?pid=newsarchive&sid=akD14lio0T3k


reuters.com/article/rbssTechMediaTelecomNews



Data Courtesy: Bloomberg + Reuters
Full Disclosure: I own shares of IBM and GOOG.

March 2009 Payrolls - Dude, Where's My JOB?

According to the U.S. Labor Bureau of Statistics' March 2009 payrolls report, the number of unemployed Americans rose to a jaw-dropping 13.2 million people. During March, the country lost 663,000 jobs and the nation's Unemployment Rate rose to a staggering twenty five year high of 8.5%. The last time the unemployment rate was this high was back in November 1983, when the economy was recovering from the 1981-1982 recession that eventually pushed the jobless rate close to 11%. Perhaps even more disturbing is the fact that nearly 1/4 of all jobless Americans have been unemployed for a period of six months or longer - this is also the highest proportion since the above-cited 1981-1982 recession.

Over the past five months, the country has lost an astounding 3.3 MILLION jobs; including a loss of 2 MILLION jobs during the first three months of 2009. For some perspective and per CNN, if no more jobs are lost in 2009 (mind you, this seems to be a VERY unlikely scenario...), 2009 would still be the 4th worst year for job losses since the government began tracking payrolls data back in 1939. In total, since the recession officially began back in December 2007, the U.S. economy has lost a sickening 5.1 MILLION jobs !


In addition to WIDESPREAD job cuts (virtually every U.S. economic sector lost jobs in March except for 'health care and education services' which actually saw an 8K increase in payrolls), employers also cut back on employee hours. The average hourly employee work week fell to 33.2 hours, the lowest level on record going back to 1964.

Lastly, the country's Underemployment Rate also warrants mention as it continued to rise and ended March at a whopping 15.6% ! FYI, the government's underemployment rate attempts to capture 1.) all unemployed Americans already included in the government's unemployment rate, 2.) those job seekers who have recently given up looking for a job, and 3.) those workers currently holding part-time jobs but are seeking full-time work. The amount of underemployed Americans rose by approx 423,000 in March and now total a RECORD 9 million American workers.


http://www.bls.gov/news.release/empsit.nr0.htm


Data Courtesy: The U.S. Labor Department

The Notorious AIG Bonuses And The LAW

Connecticut Attorney General Richard Blumenthal recently sat down with Fox News commentator Glenn Beck to debate the $220 million AIG bonus fiasco. What transpired was an especially lively and spirited debate focused on the United States government's 'legal authority' to take back the bonuses contractually guaranteed to AIG employees.

In terms of background, American International Group (AIG) is the NOTORIOUS U.S. financial products company that foolishly risked and LOST the house on sour, unregulated credit default swap (CDS) investment bets. The only reason AIG even exists today is because of the U.S. government's highly controversial September 2008 decision to intervene in the financial markets and assume the company's gigantic GLOBAL liabilities. To date, the government has essentially taken over the insurance behemoth by infusing it with approximately $180 Billion in U.S. taxpayer funds in return for an 80% ownership stake.


While I most certainly understand and empathize with the public's justifiable OUTRAGE (...there are after all 180 BILLION reasons to be OUTRAGED over these bonus payouts...), I believe Mr. Beck's assessment is fair and share his concerns regarding precedent and the 'Slippery Slope of LAW' issue now facing the country.


Part 1:



Part 2:




Data Courtesy: Fox News