Buffett left red faced as IBM’s shares tumble
JUST days after legendary investor Warren Buffett admitted that buying a near four per cent stake in Tesco was a “huge mistake”, another one of US fund manager’s big gambles is looking shaky.
IBM. led by chair and CEO Ginni Rometty, yesterday reported that sales fell four per cent to $22.4bn (£13.9bn) in the three months to the end of September – its ninth consecutive quarter of declines.
Shares in the company fell almost 13 per cent as a result of the disappointing figures, which showed net profit sliding to just $3.46bn, compared with $4.14bn in the same period last year. The company also cut its five-year profit target of $20 a share by 2015.
That target was one of the primary factors which attracted Buffett to spend $10.7bn on a 5.5 per cent stake in the business, having been famously reluctant to invest in the technology industry.
He broke with tradition in 2011 saying: “I don’t know of any large company that really has been as specific on what they intend to do and how they intend to do it as IBM”. Buffett has since increased his stake to more than seven per cent.