Milunovich, in his report, comes right out and says, "Low quality earnings -- yet again."

He also notes, "The stock has traded in a multiple range of 10-16 times the past five years. We think the low end of that range is appropriate given increased uncertainty."

And that's the point, which most investors ignored until now. As I quoted Fred Hickey of the High-Tech Strategist newsletter bemoaning in that piece last year: The company was getting a growth multiple for no top-line growth.

And it didn't just happen.

"Over the past five years," Hickey wrote at the time, "IBM's revenues have barely budged ... that's with a strong tailwind from a weaker dollar and the benefit of 55 acquisitions totaling to a cost of $17.25 billion and very few divestitures. It looks to me that real 'organic' growth has been negative, even throughout the economic rebound."

It didn't matter then because investors bought into the "roadmap" and ignored everything else.

Reality Check: They aren't anymore. This has been a story, in large part, of buybacks to get the earnings per share higher. It's a big reason, based on his comments, Warren Buffett is in the stock.

Confession and no surprise to anybody who knows me: I'm a huge Buffett fan, but he'd be the first to tell you he is not always right. In the long run maybe he will be on IBM (I've learned you can't be dogmatic on names like this -- and I'm talking about me not he) but it was a tech stock purchase by a guy who used to go out of his way saying he does not invest in tech. And the buybacks, some apparently at higher prices, have done little more than lift the earnings per share at a company whose top line is flatlining. IBM's quarterly revenue is back to where it was in in 2008, but its stock is 45% above its 2008 peak. The reaction to that is usually something like, "Duh, buybacks, silly!" To which Ken Hackel of CT Capital -- and author of Security Valuation and Risk Analysis: Assessing Value in Investment Decision-Making -- says: "IBM shows the folly of share buybacks; they do NOT change return on capital which is essential for superior performance."

Hard to argue with that.

-- Written by Herb Greenberg

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security.

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