Kyndryl has a recent history of declining revenues. KD has released the IRS form 8937 indicating that IBM will get 95.8% of original basis, with the KD shares receiving 4.2%.

"One should invest based on their need, ability and willingness to take risk - Larry Swedroe".

IBM has long been a big dividend investors stock and Kyndryl currently does not pay one. DXC is the most profitable of the three peers, but its revenues are declining faster. The great hope of AI tied to Watson failed. Kyndryl does not currently pay a dividend. So one option is to be aware and live with it., My option to fix it would be next day meaning day after the spin-off, enter a Shares Transferred transaction that transfers all IBM shares from this account to this (same) account. 8. by netmouse Fri Nov 05, 2021 2:25 pm, Post By providing your email address below, you are providing consent to Kyndryl to send you the requested Investor Email Alert updates.

While most other cloud providers are enjoying 20-50% revenue growth, IBM floundered. How To Fix Start Menu Not Opening Windows 10? A customizable modal perfect for newsletters. I am not receiving compensation for it (other than from Seeking Alpha).

The 10 member Board has 3 women and at least 3 members of color. I have shares of IBM held by Computershare, and about the same number with Morgan Stanley. ESG- Kyndryl already gets 60% of its data center energy from renewable sources. I have tried to use the Corporate Spinoff functionality several times, unsuccessfully. However, profits are better than they look as they are understated by depreciation significantly exceeding capital expenses. According to a Kyndryl presentation dated October, 2021 being free of IBM increases Kyndryls total addressable market (TAM) from $240 billion to $415 billion. Revenues and earnings have been declining for years. That is still below the peer average of 0.50x for price to revenues. you. -. The total cost basis can be calculated by using the information you have about the purchase price of the stock, dividends paid, and brokerage commissions, then subtracting that amount from the gross proceeds to get the capital gain amount. by GP813 Sat Nov 06, 2021 11:03 pm, Post Generally, for U.S. federal income tax purposes, IBM shareholders are required to allocate the aggregate tax basis in their IBM shares held immediately prior to the Distribution among the Kyndryl shares received in the Distribution and their IBM shares held immediately after the Distribution. Upon completion of the distribution, Kyndryl will hold 9% of outstanding IBM debt. I was an IBM shareholder that received Kyndryl shares on November 3. by netmouse Fri Nov 05, 2021 11:02 am, Post The way you describe it, it sounds like the shares you buy via ESPP are not the same as IBM common stock. Kyndryls revenues are annuity-like in that they are highly recurring and mostly on long term contracts. 2. I say adjusted because Unisys has huge pension obligations that eat up their profits in many years. I also have ESPP shares of IBM and now KD. The problem with this process is that Quicken is calculating the bases of the old shares incorrectly, not in total, but instead at the lot level. Also you have two transactions that simply don't exist in the real world, and, historically, RtrnCap transactions have been known to introduce error into the data base. Since Kyndryl was just spunoff, there is a lot of noise in the numbers. A study of spinoffs by factorinvest.com is shown in the following chart. IRS Form 8937, Report of Organizational Actions Affecting Basis of Securities, provides more information about the basis consequences of the Distribution and detailed information about how to allocate your cost basis between the IBM and Kyndryl shares.

Unlike Microsoft, IBM (. ) Different FIs handle those differently.

This allocation should be made in proportion to the relative fair market value of the IBM shares and Kyndryl shares held at the time of Distribution. The tax basis of the original IBM shares gets allocated between the two stocks based on FMV. I believe it should be trading at a similar price to sales as its peers, or at least double its current price. As I will show below, Kyndryl is currently trading at a 3.7x EV/EBITDA valuation. All that will miss is the small amount of cap gains associated with the CIL sale. Enter Add Shares transactions for each lot of the Parent company with their correct basis., the two post spin-off prices are similarly correct, and, you realize you are seeing the valuations before the CIL transaction is considered.. This will allow flexibility for growth through acquisitions, dividends, and business investment. Therefore, you would allocate 4.18% ($5.28 / ($120.85 + $5.28)) of your tax basis in your IBM shares immediately prior to the Distribution to the Kyndryl shares received in the distribution and allocate 95.82% ($120.85 / ($120.85 + $5.28)) of your tax basis to your IBM shares. I use Fidelity so I have access to the actual cost basis data they are using, but I cannot get Quicken to match this data. As of December 3, 2021 it closed at $18.63 having bounced off a low of $15.45 three days earlier. That indicates a proforma $60 million profit in that quarter. For the first 9 months of 2021, they claim adjusted EBITDA of $2.06 billion. Management believes the increased revenue decline in the third quarter was due to customer hesitancy for new projects with the business for sale prior to the spinoff announcement. The balance sheet is relatively strong. That then leads to the question of which lots do the fractional shares come from., In your case, the easy solution for the KD shares is to edit each of the 8 Add Shares transactions of KD shares to match your post-CIL Fidelity info. 00). Kyndryl upon its spinoff issued $3.2 billion of bonds. I was the Credit Manager for a mid-sized publicly traded bank and retired early in 2013. It also has a good balance sheet, and the majority of the largest companies as existing customers to cross sell to. Any suggestions would be greatly appreciated. I also believe its due to management being better incented with compensation including stock and options directly tied to the business.

All this and tax loss selling should be over soon, removing major headwinds for the stock. Box 505005 No matter how simple or complex, you can ask it here.

The chart below shows KD has dropped from $31.50 when issued to $18.63 currently.

The MiscIncX is to get the Investment Performance Report (IPR) and related average annual return figures right. by MarkRoulo Fri Nov 05, 2021 1:25 pm, Post Quicken created about 140 'Added' entries for Kyndryl each with a unique number of shares, one 'MiscIncX for $282,698, and one XIn from Morgan Stanley along with a RtrnCapX transaction in the Morgan Stanley account for $20,209. In January, 2020 she was replaced as CEO by Arvind Krishna, the head of IBMs cloud division. The Bogleheads Wiki: a collaborative work of the Bogleheads community, Local Chapters and Bogleheads Community, https://www.ibm.com/investor/services/f stribution, https://twitter.com/wallstcynic/status/ 6112206853. Kyndryl defines deferred costs as costs for software, contract setup and other contract costs. The distribution was effective as of 5:00 pm, Eastern time, on November 3, 2021.

I hold 473 shares of IBM, so I guess I'll be receiving about 94 shares of Kyndryl.

I wrote this article myself, and it expresses my own opinions. Management plans Management has been somewhat vague to this point on goals for profit margins, cost cuts, and growth initiatives. Kyndryl executives will ring the Opening Bell at the New York Stock Exchange today, and its stock will begin trading under the ticker symbol KD.. I followed these directions (or at least I think I did). will ibm stock holders get kyndryl stock? Its just a matter of if they can execute on it. There is little churn year to year though in recent years those lost were not being replaced fast enough. I have spent hours on this, and am just looking for a simple solution. q_lurker: I am trying to capture the correct information for the IBM/KD spinoff. I continue to use the old Remove/Adds series of transactions for spin-offs, making my calculations outside of Quicken.. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. However, as it moves to offer more services from the cloud, that will be reduced. This makes spinoff Kyndryl (NYSE:KD) the worst of the worst. DXCs average revenue decline was 5.8% the last four years, but closer to 10% this year. That means more free cash flow.

The separation from IBM could cost Kyndryl some customers. They will likely do so as that makes it quicker and easier to move into adjacent businesses they couldnt offer before.

However, it suddenly has a number of catalysts that could improve earnings, revenues and the stock price. In the medium and long term, the most important thing here is Kyndryls opportunity to pursue a whole range of business they couldnt before. However, $529 million of that is spinoff related costs net of some higher expenses needed to be independent.

Thx Tom. It clearly shows outperformance to the parent and the stock market. 11. That headwind should disappear rather quickly. Please disable your ad-blocker and refresh. The cost basis per share can be calculated in two ways: Take the original investment amount ($10,000) and divide it by the number of shares you own (2,000 shares) to arrive at the new per share cost basis ($10,000/2,000 = $5). by psteinx Fri Nov 05, 2021 1:00 pm, Post I am raising my hand with a resounding me. I log in to Computershare but see no KD shares, just my IBM ESPP and Dividend shares.

How should I enter this. DXC (DXC) and Unisys (UIS) are much more profitable on an adjusted basis. IBM plans to sell its remaining 19.9% stake within a year. The main reason is it is in a declining industry. I'm gonna have to go to Investopedia to see what the mathematical formula for IRR is. Customers represent 75 of the Fortune 100 companies. Did I lose real value with now having less value in the discounted IBM shares, that is not made up by the new KD shares? 9. Dividend initiation Once the smoke clears and its apparent Kyndryl is solidly profitable, a dividend is likely. Spin-offs occur when a company separates into several parts. ), Back to the IBM shares lot basis values - Clearly there is no absolute. The net debt of $1.2 billion is only 29% of tangible net worth. I am in a similar situation. The reason is a migration of IT data centers to the cloud.

IBM was uniquely positioned to benefit from the cloud and data center explosion, but whiffed on both. In the first 9 months of 2021, revenues totaled $14.1 billion, down 2.2% from the prior year. IBM was uniquely positioned to benefit from the cloud and data center explosion, but whiffed on both. It does not purport to be complete or to describe the consequences that may apply to all or certain categories of shareholders. Kyndryl originally traded at $40 on a when issued basis starting on October 24, 2021. A total of 80 IBM kiosks will be distributed. Kyndryl joined the S&P Midcap 400 on November 5 th and there are about 224 million shares outstanding. If you owned IBM common stock as of the close of business on October 25, 2021, the shares of Kyndryl common stock that you were entitled to receive in the distribution were issued as follows: Kyndryl Holdings, Inc. common stock trades on the New York Stock Exchange under the symbol "KD". IRS Form 8937, Report of Organizational Actions Affecting Basis of Securities, attached below, provides information in regards to how the distribution affects the basis of your IBM shares as well as how to determine the basis in your Kyndryl shares. The KD stock takes value out of the ESPP discounted IBM stock, it is not discounted but a separate company. Note that U.S. federal income tax law does not specifically prescribe how you should determine the fair market values of the IBM and Kyndryl shares for purposes of allocating tax basis and there are multiple ways of computing this. Other short term tailwinds are insider buying and more clarity on managements plans. They already have a highly skilled workforce that can easily move into adjacent businesses.

This ended about a decade ago when the cloud emerged and many large corporations moved their IT data centers to cloud providers such as Amazon Web Services and Microsoft Azure. As part of the separation, IBM stockholders will receive 1 percent of Kyndryls outstanding shares on a pro rata basis.

As Kyndryl moves forward as an independent company, we look forward to our partnership. The balance sheet has moderate leverage. In Quicken, the by lot numbers are correct IF -, Quicken treats the spin-off as distributing the fractional share the requiring a separate sale of the fractional share for the cash-in-lieu amount. Software developer enthusiast. Computershare was the distribution agent in connection with the distribution and is the transfer agent and registrar for both IBM and Kyndryl.

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