{"id":1036,"date":"2010-07-19T18:51:31","date_gmt":"2010-07-19T22:51:31","guid":{"rendered":"http:\/\/www.credittrends.com\/blog\/?p=1036"},"modified":"2010-09-01T16:11:13","modified_gmt":"2010-09-01T20:11:13","slug":"ibm-%e2%80%93-again-pension-underfunding-a-leading-indicator","status":"publish","type":"post","link":"https:\/\/www.credittrends.com\/blog\/2010\/07\/19\/ibm-%e2%80%93-again-pension-underfunding-a-leading-indicator\/","title":{"rendered":"IBM \u2013 Again, Pension Underfunding a Leading Indicator"},"content":{"rendered":"

IBM<\/a>, although a very strong credit, has been shrinking equity and buying back its shares (see our earlier articles: CFOs Making the Same Mistake<\/a> and The Folly of Share buybacks<\/a>).<\/p>\n

It has also been underfunding its pension. When firms look to squeeze cash, the pension is an obvious target, and more often than not, disappointment, especially relative to expectations, is on the way. A couple of weeks ago we wrote IBM is underfunding its plans.<\/p>\n

Please see our related articles on pensions and free cash flow implications of underfunding:<\/p>\n

    \n
  1. Details Matter<\/a><\/li>\n
  2. Pensions-Buyer Beware<\/a><\/li>\n
  3. CNBC Strategy Session \u2013 Underfunded Pensions Earnings Bombshell<\/a><\/li>\n
  4. CNBC’s Herb Greenberg – Underfunded Pensions are Red Flag for Investors<\/a><\/li>\n
  5. The Next Shoe to Drop?<\/a><\/li>\n
  6. The Other Shoe – Part 2<\/a><\/li>\n
  7. With 3-, 5-, and 10-Year Stock Returns Negative: Why Are Pension Funds Assuming 8% Returns<\/a>?<\/li>\n<\/ol>\n

    Disclosure: No positions<\/p>\n

    Kenneth S. Hackel<\/a>, C.F.A.
    \nPresident
    \n    CT Capital LLC<\/a><\/a><\/p>\n

    Subscribe to CreditTrends.com<\/span> by Email<\/a><\/p>\n

    For additional information on the implications of pension underfunding and its impact on free cash flow, cost of equity and return on invested capital, pre-order- \u201cSecurity Valuation and Risk Analysis<\/a>\u201d out this fall from McGraw-Hill.<\/p>\n

    Share on Facebook<\/a><\/p>

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    IBM, although a very strong credit, has been shrinking equity and buying back its shares (see our earlier articles: CFOs Making the Same Mistake and The Folly of Share buybacks). It has also been underfunding its pension. When firms look to squeeze cash, the pension is an obvious target, and more often than not, disappointment, […]<\/p>\n

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