DEBRIS.COMgood for a laugh, or possibly an aneurysm

On January 16, Bear Stearns analyst Andrew Neff recommended a sweeping consolidation for the computer industry (a plan another analyst termed “the height of stupidity”). Under Neff’s plan, Apple would stop making computers and become, instead, an industrial design shop, designing Windows machines. Presumably he believes this would be to their advantage, a step in wringing out the “fundamental overcapacity in the PC industry.” (Man, that’s dumb.)

IBM, according to Neff, needs to sell its PC business to Dell or Compaq. I have to guess this dramatic change is required by forces of the market — for an analyst to recommend that a company sell off a division, wouldn’t you think that division must be doing badly, or not be a good fit with the company’s overall business plan?

The answer is “no,” as far as I’ve seen. Analysts pretty much recommend whatever ridiculous plan would generate the most income for their own portfolios.

A day after Neff’s report, IBM announced 4th-quarter results that were strong enough to instigate an 11% jump in their stock price. Apparently Neff’s prediction was way off base… certainly there was nothing in IBM’s results to warrant selling off huge pieces of itself to the highest bidder.

Neff himself didn’t admit any mistake (to no one’s surprise), although he reversed his position on IBM about 179°. CNET reports, “Neff said the stock should do well as long as IBM’s operations remain steady…” Further, “Neff added that with several business lines likely to pick up momentum in 2001, the time to own IBM is now…”

Err, at what point during this operations-remaining-steady and business-picking-up should IBM auction off their PC business?

I find it laughable that analysts spin these absurd scenarios. Here’s what I’d like to see: a disclaimer on every one of these analysts’ reports that indicates how much the analyst will personally profit if anyone follows his or her advice.

IBM should sell off its PC business to Compaq or Dell. BTW, if they do that, my company will underwrite the process and will make about seven million dollars. My commission will be enough to buy another three Ferraris.