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Buffett Says Berkshire Has Bought About $10.7 Billion in IBM
- martinkallstrom 15y agoEven more interesting: what IT stocks did he sell to put the money in IBM?
- forensic 15y agoI thought Berkshire doesn't invest in IT?
- martinkallstrom 15y agoTrue (until now, I assume). But they must have liquefied some holdings, or did they front the cash for a $10B stake? It tops most of their existing holdings like $5B in Proctor & Gamble and $2B in Wal-Mart (which are some of the largest holdings they have on hand).
- jonknee 15y agoBRK has a mountain of cash, they did not need to sell off stocks to buy shares of IBM. http://www.google.com/finance?q=NYSE:BRK.A&fstype=ii http://www.google.com/finance?q=NYSE:BRK.A&fstype=ii (As of the last quarter they had nearly $35b in Cash & Equivalents.)
- basseq 15y agoFrom The Snowball: "Buffett understood the basics of computers perfectly well. But he would not consider buying a technology stock at any price. 'When it comes to Microsoft and Intel,' he said, 'I know know what the world will look like ten years from now. And I don't want to play in a game where the other guy has an advantage." This was, I believe, in 1999, so a) he was right at the time coughpets.comcough and b) it's been more than the aforementioned decade, so maybe he has a better idea of what the world looks like now. Regardless, interesting point.
- jvehent 15y agoInvest in companies that are actually producing something valuable. That's the way to restart the economy. Can we all move on from the social media bubble and get back to real work now ?
- pagejim 15y agoPerhaps it would be helpful for all, if you could specify what in your opinion is "real Work"? We're all here to share views and we could learn something from what is at the back of your mind.
- nobody31415926 15y agoShipping real things for real money to real customers who themselves have real customers who are paying them money?
- olalonde 15y agoI guess we would have to define "real" now.
- zanst 15y agoI think you're wrong, because "social media" is not a bubble. Actually, it's part of the real life. :-) And I don't know what Warren wants with this, maybe he's believing in another monopolistic move of IBM, which is not too smart these days.
- jvehent 15y agoActually, I agree with you on the benefits from social media to the society. But for 5% of useful features, there is 95% of trendy/fashionable projects that do not have any benefits to the grand scheme of things, are really expensive (color?) and are driving workforce away from more important projects.
- zanst 15y ago
- icki 15y agoI wonder how much of it has to do with their new 3d semiconductors [1]. These things seem ideal for dedicated servers and the like. [1] http://www.youtube.com/watch?feature=player_embedded&v=rbj5vrXulD http://www.youtube.com/watch?feature=player_embedded&v=r...
- martinkallstrom 15y agoVery little or a lot, depending on your perspective. Long term investments look at strong projections and long term development, not in a single technology with high risk. But projects like the one you refer to is certainly proof of a strong and competitive R&D capability, which is something to invest in.
- loumf 15y agoBuffett usually doesn't care about stuff like this. He cares about profitable business models that throw off a lot of cash in dividends. He uses those to make big infrastructure investments for long term continuous cash (like utilities). His letters to shareholders lay out his strategy in very plain language.
- asto 15y agoThat's one of the best shows of support Virginia Rommety could get!
- 6sigma 15y agoFWIW, IBM is more expensive on a PE basis, trading at trailing PE of 14 compared to Microsoft's PE of 9.8.
- maigret 15y agoYes, still IBM have been much better stock results than MSFT. Indeed, over this one year, the IBM stock has been doing better than AAPL.
- parfe 15y agoFrom not a very good trader: I think, even if you include dividends, any money in MSFT has been completely stagnant for 10 years (and may have actually lost value). IBM stock paid dividends and nearly doubled in the same time period.
- chernevik 15y agoHe said he won't buy MSFT b/c he's close with Gates. If he bought and they announced a share buyback / dividend, people would wonder if he heard something from Gates. He sees no point in running that risk. Not a MSFT fan myself but I have to regard Buffett's frienship with Gates as a pretty strong endorsement of him as a businessman.
- bostonpete 15y ago> I have to regard Buffett's frienship with Gates as a pretty strong endorsement of him as a businessman. I would have assumed it had more to do with endorsing him as a philanthropist...
- nknight 15y agoHint: Watching CNBC doesn't make you a good investor, and throwing around the letters "PE" just makes you look like the worst kind of shallow, ignorant investor. No experienced investor bases stock purchasing decisions off P/E ratio alone or even primarily, because the metric has absolutely no intrinsic meaning.
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- bobbles 15y agoFrom what I undersand, Buffet has always avoided technology companies because he believe he didn't understand them well enough in order to invest. Someone at IBM must have changed his mind?
- leyfa 15y agoRevealing my ignorance on this topic: Why would IBM care who owns their stocks, assuming the specific shareholder doesn't try to take influence on the development/direction of the company?
- loumf 15y agoBuffett only owns companies at a level where he can influence. Usually, what he wants is profit paid as a dividend, but it depends on his level of investment. He usually does not invest for growth -- he thinks IBM is under-valued, so he's taking a position.
- noahc 15y agoThey don't. The parent is wrong in suggesting someone 'convinced' Buffet. Because of the herd mentality around investing who invests in you does matter, but not for this discussion.
- bobbles 15y agoI didnt say convinced so you shouldnt really quote it like that. But then I didnt really mean it that way either. I was thinking more along the lines of Buffet talked with people at IBM and realised that he understood the way they operated.
- noahc 15y agoHe never met with the CEO[1] and in fact messed up the name. It is in the realm of possibility (and quite likely) that he talked with people inside IBM. But I don't think they were really pushing for him to buy it. At least it doesn't appear that way. [1]http://tech.fortune.cnn.com/2011/11/14/warren-buffett-ibm/ http://tech.fortune.cnn.com/2011/11/14/warren-buffett-ibm/
- mark_l_watson 15y agoIBM has made some very good decisions, in particular realizing that huge amount of money that can be made in expert solve any problem services and sought to make infrastructure a cheap commodity so companies could spend more on services (i.e., investment in open source). So smart, and something I would never have been able to figure out without hind site.
- nolok 15y ago>hind site hindsight
- mark_l_watson 15y ago+1 Thanks. My wife copy edits my book manuscripts, need to get her to do the same for my HN posts :-)
- pagehub 15y agoI am involved with IBM quite a bit as we are through to the final of their Smartcamp competition. I have been so impressed by the way they deal with small businesses, always looking to form mutually beneficial partnerships to fill in gaps in their service offering, giving small companies access to huge markets they would normally have no chance of entering. Really excited about their future, think the best is yet to come.
- ma2rten 15y agoLike they did with microsoft?
- windexh8er 15y agoIBM is betting big on BigFix. I'm guessing this is a large component of that buy.
- marshallp 15y agoMight be something to do with watson. Maybe Buffet's privy to watson applications before everyone else and is making a bet on it.
- hello_moto 15y agoIBM is a little bit weird. While it's true that they don't build product, they're still milking those old LotusNotes, FIM, WebSphere (enterprise version) installation. Those things will become more expensive to maintain through time. The recent IBM offerings are all based on Open Source being re-packaged: - IBM packaged Hadoop - WebSphere Community Edition is based on Tomcat - IBM HTTP Server is based on Apache By utilizing open source being pre-packaged and charging for support, they basically can get rid of expensive Software R&D and at the same time probably make an in-road to SMB: use the software that you've been using but with IBM support behind it! (discussion regarding the quality of IBM support is left for other time but let me say this straight up: Microsoft software support has been far more superior in terms of speed and the quality of the response than IBM lately). Having said that, IBM is also becoming some sort of SaaS for government agencies. In some places in North America, IBM machines are printing the local ID card (and probably Driver's Licenses as well). So when a resident lose their local ID card, they'll have to pay the Government certain amount of money and IBM takes a percentage of that. Maybe Buffett and his co. saw a big picture of IBM strategy to become more aggressive in that market (SaaS for big enterprises) seeing that Big Data is all the rage these days. That's a bigger lock-out that nobody can escape for years and still charging money without having to upgrade or add more features to compel people to upgrade.
- tptacek 15y agoIBM also contributes to many open source projects. Many major open source projects are staffed primarily by developers from companies like IBM. So this may just be what dev output looks like when a company embraces open source; a good thing.
- AJ007 15y agoWhat I've noticed is Berkshire Hathaway public stock investments tend to fit two criteria - First, does it pay a dividend? Yep, IBM does. Second, is it integrated into the overall economy? I think of it as if imagining what would happen if the company just up and vanished over night. So railroads, power companies, this would result in a lot of other companies would have big problems. Then of course there are all the other details like the companies finances, executives, and so on that you hear about over and over again in any literature about Berkshire Hathaway. Consumer oriented companies dominate the news and books because all the inner workings are like a soap opera to the public. But, you can learn just as much from all of these other companies. Most certainly it hones your research skills since the details aren't being delivered to you on a silver platter.
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