When Warren Buffett talks, people listen. Buffett confessed on Friday morning, ahead of the Berkshire Hathaway Inc. (NYSE: BRK-A) annual meeting, that he and his team had unloaded part of their massive stake in International Business Machines Corp. (NYSE: IBM). While there are some broader issues to consider here, the reality is that the early sell-off in IBM shares has put pressure on the Dow Jones Industrial Average.

Buffett told CNBC that he had sold about 30% of his stake in IBM after its shares hit $180 or so. He also said he stopped selling shares after they fell to about $160. This impact has ramifications for the Dow’s index change on Friday, and it has a role on what CEO Ginni Rometty’s future may hold.

Earlier in the week, Moody’s Investor Services actually downgraded IBM’s corporate credit rating. Moody’s does think IBM can grow what its calls its “strategic initiatives,” but the agency feels that Big Blue will spend more on those initiatives and on gradual acquisitions. Whether that credit rating cut from Moody’s will make IBM’s relative borrowing costs rise ahead remains to be seen.

The Dow is a price-weighted index rather than a market cap-weighted one, and IBM has the fifth highest weighting in the Dow, at 5.2%, behind UnitedHealth (5.69%), Boeing (5.98%), 3M (6.52%) and Goldman Sachs (7.41%).

If the Dow was a market-cap weighted index, IBM would have far less of a market impact on it. Its fifth highest price-weighting actually is ranked at number 11 of 30 (under the median market cap), with a $149 billion market cap.

To prove the point here: the S&P 500 Index is a market cap weighted index, and it was up $1.80 (almost 0.1%) while the Dow was down 25 points (over 0.1%), while and the Nasdaq was up four points (almost 0.1%). These are not huge numbers on the surface, but imagine if there is a day when IBM shares were down more than the $4.03 (or −2.5%) at $155.02.

As far as what the IBM stake sale really means, let’s see what Buffett actually told CNBC about what made him change his mind about the value of Big Blue:

I think if you look back at what they were projecting and how they thought the business would develop I would say what they’ve run into is some pretty tough competitors. IBM is a big strong company, but they’ve got big strong competitors too.

Buffett said his sales were based on a lot of things. This was noted as IBM’s earnings and the decline in sales over time not proving to have as wide of a moat as he once thought. Buffett’s strong competition is coming from Jeff Bezos of Amazon.com Inc. (NASDAQ: AMZN) and Satya Nadella of Microsoft Corp. (NASDAQ: MSFT). These two companies are more than formidable competitors against IBM in the cloud computing business. IBM’s Watson, its artificial intelligence business, is still growing handily, just not fast enough to stop the bleeding in IBM’s core IT-services operations.

IBM has now posted almost 20 disappointing quarters of negative revenue trends, and Thomson Reuters does not see that revenue inversion changing very much (if at all) through 2020. IBM’s revenues were $104 billion in 2012, and they have slid ever since. Thomson Reuters sees a 2.1% sales drop to $78.3 billion in 2017, followed by $78.2 billion in 2018, $78.0 billion in 2019 and $75.2 billion in 2020.

Buffett’s news on Friday is a mixed bag for the fate of Rometty as chief executive of IBM. It would be easy to argue that she was given a gutted company just in time for the explosive growth of Amazon’s AWS and Microsoft’s rekindled cloud growth under Nadella. The problem is that her efforts to grow the strategic initiatives have not created a transformational move like we have seen elsewhere. She also has continued with the financial engineering for IBM’s buybacks, dividends and earnings per share.

On the flip side, if Buffett said that he only sold 30% of the stake held by Berkshire Hathaway, then he is still endorsing IBM 70% as much as he was six years ago. That might not seem too bad on the surface, but the 81.2 million share stake was last seen at 8.54% of the outstanding shares, and Berkshire Hathaway was the largest holder by far, with Vanguard’s 57.8 million shares being a 6.1% stake and with State Street’s 51.0 million shares being almost 5.4% of the shares outstanding. BlackRock was the number four holder of IBM shares at just a 2.5% stake.

Buffett entered the confessional booth on his IBM share sale. He did of course leave the door open to buy shares again if the price were drop enough, but Buffett can also sell more shares or shrink his position to zero — he is not a 10% stakeholder.

As far as whether Buffett would really buy more IBM shares, his history has proven that he would rather be unpredictable and that he likes to be in control. His history of selling a big stake has usually been to sell more shares rather than go out in purchase more at lower prices.

As far as more commentary out of Buffett, he pointed toward earnings and selling or buying more shares. Buffett told CNBC:

Well no I wouldn’t say the specific earnings disappointed me but I would say that I don’t value IBM the same way that I did six years ago when I started buying it. I mean overall I think the 6 years that I’ve revalued it somewhat downward and a matter of fact when it got up over $180 we actually sold a reasonable amount of stock.

I don’t think we will be selling. in fact we could buy. I mean I continuously look at what they do, I look at the price of the stock when it was over 180 and I looked at what was happening and everything, they’ve run into some very tough competition.

Buffett also told CNBC that Rometty asked if he had sold shares, as she had gotten reports that Buffett was selling his shares. Buffett then told CNBC that he didn’t tell her how many shares had been sold, nor the rationale or the share prices. Buffett said:

Ginni Rometty was out a few weeks ago and actually they had had some stock watch. I don’t know your viewers are probably familiar with it but there are some stock watch firms. I don’t even know their names, I don’t know how many there are but they a lot of big companies use them. … Berkshire does not use them, and they report to management who they think is buying and selling. In fact, I don’t think I’ve ever even read a story on them or anything. I think it would be very interesting just to know who they are, how much they charge, how they get their information because we’ve had that happen 4 or 5 times that a management will say that they kind of wonder or they are sort of hearing or something of the sort that we might be buying or selling and like I say I don’t know quite how they get the information.

IBM’s stock was down 2.5% after nearly a $4 drop after about an hour and a half of trading. IBM has a 52-week range of $142.50 to $182.79, and it has a consensus analyst price target of $166.70.

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