by David Stockman
David Stockman’s Contra Corner
IBM has long been a poster boy for the untoward effects of central bank financial repression. For most of this century the once and faded king of tech has been in a modality of slow liquidation, leveraging up its balance sheet with cheap debt to fund stock buybacks, dividends and accounting-driven two-bit M&A deals. This morning that destructive strategy—–pursued by two incompetent CEOs in a row—–came to a thundering crash. IBM is now down by 7% and deserves to go far lower.
Perhaps even the robo-traders have had enough—–given that IBM reported its 10th straight quarter of negative revenue growth, a $4.7 billion write-down of its chips business and a huge 12% miss on even the street’s phony “ex-items” earnings number. But the canary in Big Blue’s mainframe was undoubtedly one simple thing, as Zero Hedge cogently noted:
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