IBM sets record low coupon for 7-year note

IU at IBM plant in Huntsville (Photo credit: Wikipedia)

By Andrea Johnson – International Business Machines Corp on Tuesday (May 8, 2012) set a record for the lowest ever coupon on a seven-year note, breaking through the 2.00% barrier in that maturity for the first time.

IBM, rated Aa3/A+/A+, sold $1.5 billion of debt in a two-part deal, consisting of $900 million of three-year notes and $600 million of seven-year notes.

IBM already holds the low coupon record in three-years with its 0.55s due February 2015, a tough number to beat. more> http://tinyurl.com/dyclvae

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The Downfall of IBM

By Robert X. Cringely – The direct impetus for this column is IBM’s internal plan to grow earnings-per-share (EPS) to $20 by 2015. The primary method for accomplishing this feat, according to the plan, will be by reducing US employee head count by 78 percent in that time frame.

This is the first thing to understand about the IBM of today: the company is being run by executives who for the most part don’t understand the products and services they sell.

IBM’s five year plan ending in 2010 was supposed to double EPS from just under $5 to about $11. (Today it is closer to $13.) During the last five years there was an accelerated push of jobs offshore for cost reasons, high attrition rates, and longer product release cycles. The next five year plan for 2015 is to again double EPS to about $20. Can this be done? Probably, but the particular way they are going about it is also likely to destroy IBM. more> http://is.gd/Eja23m

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