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Big Blue Ekes Out a Win


This business of rewriting the


coverage of major companies' earnings is getting a bit tiresome, but if I don't do it, who will? This morning we are greeted with an article about what an ugly quarter


(IBM) - Get Report

had. Sure, the stock has its apologists, but according to the story, the quarter was a mediocre one at best, beset by problems large and small.

Okay, enough already.

Let's just forget business for a second. Let's use a sports analogy, sticking with baseball for now. IBM struggled at the bat all quarter, scratching out a couple of runs courtesy of some excellent base running, a couple of good bunts, a sacrifice fly and a Texas Leaguer by the software boys who made the difference. In the meantime, stellar fielding -- expense control, cash management and aggressive share buyback -- with no errors kept the number within expectations.

Now, here's the score part that the


never gets right.

Jeff Berkowitz

and I have one eye on


and another on the new Web site with pictures that makes the IBM conference call a real blast. It is so obvious that IBM was able to contain any damage while waiting to unveil a giant new G-5 mainframe product cycle that we are prowling for any offers, hoping to catch someone napping, thinking this was a bad quarter.

First we bid 120 for the stock. Nothing doing; didn't have this more-negative-than-it-should-have-been


article working for us. Then we moved up to 121, basically willing to pay a little below where the stock went out, still trying to pick someone off looking the wrong way. Nada.

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Finally, we go up to 122, where at last someone bangs us for a couple gs. We hang out there for the duration -- hence the 122 price that you see in your


story -- kind of like

My Personal Journal

!!!! -- before moving up to 122.5, where nobody hits us. I tell my trader to take any 122 handle (meaning anything with 122 at its start) but none surfaces and the next thing you know it is 6:15 and nobody wants to play. I could have taken 123 stock for effect, but I am trying to make money here, not affect the stock price.

My point: If this were as crummy a quarter as the


thought it was, why would I, currently long IBM at a much lower level, be willing to pay these prices?

Because this quarter was unimportant. What mattered was that IBM got through it and now has something big to sell that has big gross margins and can complement the incredibly positive growth of the software business. In other words, IBM had a tough win, but it was a win.

And that's what matters, both in baseball and in stocks.


Random musings:

Syre and Bailey's Fidelity

article is a must-read for two reasons: One, it is nice to see that Fido, when it cuts off the dough that comes in willy-nilly, can immediately revert to its old beat-the-market style, and two, the same group of stocks that act so well also happen to be the stocks these guys own. I see a pattern!

James J. Cramer is manager of a hedge fund and co-chairman of

At time of publication his fund is long IBM, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to at