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Jim Cramer On IBM's Future After Buffett Cut Stake

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International Business Machines Corp. (NYSE: IBM)'s profile as an attractive investment certainly fell last week after Warren Buffett confirmed Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) sold around one third of its entire stake in "Big Blue."

CNBC's Jim Cramer commented on IBM's future during his daily "Mad Money" show on Friday.

Perhaps most important, Cramer believes that for so long IBM had the "blessing" of its biggest shareholder in Buffett then the company had time to spur the necessary changes to move the company forward.

But after Buffett cut his stake, he's no longer IBM's biggest shareholder as that title goes to index fund Vanguard. As such, IBM CEO Ginni Rometty may not be as "protected as she tries to get the job done." On the other hand, Cramer thinks Rometty could "feel liberated" to go out and acquire a cloud-based company that "would change the company's complexion overnight."

IBM's strategy of seeking out smaller acquisitions and paying "so much cash" to shareholders through dividends and buybacks pleased the likes of Buffett but fails to bring in new investors.

One of the acquisitions Cramer suggests is for IBM to buy Twitter Inc (NYSE: TWTR).

"[IBM] could buy Twitter to take advantage of all of its ability to keep track of the feedback for its customers while using the exquisite direct message function to stay in touch with those clients," Cramer concluded. "It would become a company that, in one fell swoop, would suddenly be a lot more social, mobile and cloud."

See Also:

Warren Buffett Tells Value Investors To Resist The Temptation To Speculate

Kevin O'Leary Talks The 'Buffett Curse' And Why Apple Would Be Foolish To Buy Netflix

Posted-In: cloud Ginny Rometty IBM Mad MoneyCNBC Jim Cramer Tech Media

 

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