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Also, check out: "Lou's Lair vs. Bill's Loft", "IBM's Best Years Are 3-4 Decades Behind," ICC: More Armonk "Fudge," Armonk's "Fudge Factory," "Now IBM Is Even 'Officially' Spineless", "Where Armonk Meets Wall Street, Greed Breeds Incest", "Some Insiders Cashed in on IBM Stock Buybacks", "Louis XIX of Armonk", "Wag the Big Blue Dog", "the new blue"  

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Annual Update to IBM Historical Perspective

IBM’s Best Years Are Three-Four Decades Behind

The 1990s, Gerstner Have Been IBM’s Worst Decade, CEO- by Far! (Except in Terms of Greed and Stock Prices)

PHOENIX, July 28 - You’d never know it by looking at IBM’s soaring stock prices, but the Big Blue’s best years are three to four decades behind in terms of the normal business fundamentals - things like revenue and earnings growth. Or the profit margins.

And the 1990s, including the six years of the "Gerstner era," have been by far the worst period in IBM’s 86-year corporate history.

But don’t take our word for it. Take a look at the charts and figures - each and every one of which has been compiled on the basis of IBM’s published financial statements. In other words, the preceding conclusions are based on FACTS, not estimates or opinions.

During the 1990s, the decade of an explosive growth elsewhere in the IT industry, IBM’s revenues grunted, groaned, panted and inched ahead at a snail’s pace - the 3% compound annual growth rate. Even the big slowdown which IBM suffered in the 1980s (10.6% annual growth) looks like a hare’s pace by comparison.

As for the 1950s, when IBM experienced a 24.3% compound annual growth; or the 1960s, when the company grew by 16.1% every year… well those were obviously the Big Blue’s Golden Years - the "Watson Era" in IBM’s corporate history.

Gerstner: The "Mr. Four Percent"

Speaking of IBM CEOs, even the (John) Askers era’s (1985-1993) dismal revenue growth of 4.3% per year was better than Gerstner’s 4.0% track record. And during his six years at IBM’s helm, the "Mr. Four Percent" (Gerstner) has also come in under Akers’ net margins (4% vs. 5%).

In fact, there is not a single performance measurement in which the 1990s or the "Gerstner era" have bettered the business results of its seven predecessors, except perhaps in terms of greed and personal enrichment.

Nevertheless, the IBM stock price has outperformed the Dow Jones Industrials Average (DJIA), of which it is a part, by 4.5 times (!) since Armonk started its massive ($28.4 billion and counting) stock buyback program just over three years ago. And it has bested the DJIA by nearly four times since the start of the "Gerstner Era" (Mar. 31, 1993).

In other words, the IBM charts and tables which follow below illustrate quite clearly that stock buybacks and insider trading have become more important a factor influencing stock prices than are the traditional business fundamentals, such as revenue and profit growth.

IBM’s stock charts speak volumes about the perversion of business which the 1990s Wall Street Era of Greed has ushered.

Happy bargain hunting!

Bob Djurdjevic

Are you eager to learn more? If so, please call 602/824-8111.

Also check out Annex Bulletins "Wag the Big Blue Dog" and "Solid Third Quarter Despite Trying Circumstances."

Volume XV, No. 99-26
July 28, 1999

Editor: Bob Djurdjevic
Published by: Annex Research;

5110 North 40th Street,      Phoenix, Arizona 85018
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