Why Buffett Still Likes International Business Machines Corp. (IBM)?


It is well known that International Business Machines Corp. (NYSE:IBM) has been struggling for growth since last eleven quarters or close to three years now. Though the company has been taking every step to put itself on growth path, it hasn’t been successful so far. This might have invited some investors to avoid the counter safely. However, Warren Buffett believes that the company is worth more than what it is now.

Warren Buffett

For instance, renowned investor, Warren Buffett, is not ready to leave the counter of International Business Machines Corp. (NYSE:IBM) and still sticks with the stock. The reason that he provided was that he liked it.

In an interview to CNBC’s Squawk Box on March 2, he said that it was doing what he had been doing since he started buying the stock. He said that there was a misconception about the way he was buying the stock, i.e. when he acquires shares the specific stock should go up. Buffett said that it was not his primary objective to do that and was the last thing he intended to do so.

The comments of Warran Buffett assumed significance since his entity held about 7.79% stake in International Business Machines Corp. (NYSE:IBM) at the end of December last year. This meant that the billionaire investor’s value in the company shed billions of dollars.

More Losses

Buffett also reportedly lost close to $1 billion on October 20 due to IBM after the IT company delivered weak earnings for the third quarter. Similarly, the stock’s 3.6% drop in price on January 21 also negatively impacted him by nearly $400 million.

Buffett also disclosed that International Business Machines Corp. (NYSE:IBM) has failed to provide any surprises after he started acquiring the stocks a few years back. He said that he had anticipated revenue to drift and also anticipated a year where foreign exchange would likely hit the company’s revenues. It only appeared that as far as he was concerned, there was no surprise in either revenue downside or foreign exchange impact.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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