Conference 7.286::digital

1995.0. "IBM doesn't have a problem..." by BLUMON::QUODLING (OLIVER is the Solution!) Fri Jul 17 1992 22:28

    With all of the downsizing and lack of vision, and commnents that the
    industry is down, the following is interesting...
    
Subject: IBM earnings soar as work force shrinks

	ARMONK, N.Y. (UPI) -- International Business Machines Corp., cashing
in on a six-year streamlining that will have eliminated 85,000 jobs by
the end of the year, posted second-quarter earnings of $714 million, or
$1.25 a share, Friday -- up nearly five fold from $126 million, or 22
cents a share, a year ago.
	Revenues rose nearly 10 percent, to $16.2 billion compared with $14.8
billion a year ago
	The earnings were within the range of analysts' expectations, which
had ranged from $1.20 to $1.40 a share. But one analyst noted they were
a ``little light'' -- noting the consensus average had been a little over
$1.30.
	And investors were not pleased. IBM was leading the New York Stock
Exchange actives list at early afternoon, down $4.50 at $95.75.
	But IBM management said the second quarter results showed the company
was making steady progress.
	``Despite difficult global economies and competitive pricing
pressures, our revenue grew in all major geographies in the second
quarter,'' said IBM Chairman John Akers. ``Our revenue increase was led
by continued growth in our services and software offerings.
	``We continue to reduce our resources, and our expenses remain under
control. We are making steady progress in reshaping IBM to be a better
focused, faster-moving competitor.'' Akers said.
	For the first half of this year, earnings climbed to $1.31 billion
compared with a loss of $1.58 billion a year ago -- when an accounting
change reduced earnings by $2.26 billion. Without the accounting change,
first-half earnings in 1991 would have totaled $682 million.
	Revenues for the first six months of this year totaled $30.3 billion,
up 6.7 percent from the prior year's $28.4 billion.
	Akers is presiding over a massive restructuring and downsizing he
hopes will get the world's largest computer company back on track --
trimming down its bulging bureaucracy and broadening its product-
marketing mix to reducing its dependence on high-margin mainframe
computers.
	Last year was the first year since 1946 that IBM didn't get bigger.
In fact, it lost $2.8 billion last year -- its first loss in history --
after recording a raft of special charges, including a $3.4 billion
charge in the fourth quarter.
	In additon to paring the bureaucracy and reducing general and
adminstrative expenses, Akers is working to disperse power concentrated
at the top of IBM's classic corporate pyramid to its various operating
units to make the company more responsive to the market -- and faster to
market with new products.
	Meanwhile, Akers is continuing to pare the work force -- while
adhering to the company's ``no-layoff'' policy. The company said it
would exceed its target of eliminating 20,000 jobs this year, though
spokesmen would not specify how many jobs will be cut.
	By the end of the year, the IBM staff will have been reduced by more
than 85,000 from its 1986 peak of 407,000 -- all through attrition and
through 87 voluntary-buyout and early retirement programs.
	But analysts say IBM must now concentrate on product issues -- like
expanding compatability with other products, improving the product mix --
with marketing attention on high-powered desktop computers and
dependence on high-profit mainframes.
	It reported after-tax margin was 4.3 percent for the first six months
of 1992, compared with 2.4 percent for the first six months of 1991.
	``I don't know anybody who's disappointed about these results,'' said
Marty Ressinger, computer industry analyst for Chicago-based Duff &
Phelps Inc. ``There seems to be pretty steady across the board progress.
They just have to keep it up.''
	``What we need to see is continued improvement of the product line
and continued cost reductions,'' he said.
	The key, he said, is to eliminate overdependence on mainframe
computers as a profit center.
	``There's just not going to be a super-growth market ever again in
mainframes,'' said Ressinger. ``They've got to go where people want to
buy.''
	``The desktop operation still isn't a real success story for IBM. But
I think between mainframe products and some mid-range system progress,
that's enough to support them while they work to make advances on the
low end,'' he said.
	``But they have to do someting in the low end to retain some of its
market leadership, which has pretty well lapsed,'' Ressinger added.
    

    ..and god knows the bean-counters in *this* outfit are looking
    at those numbers very closely...

    
    	IBM has secured a government contract to build a network of
    	nuclear testing programs to enable testing to be done by sim-
    	ulation rather than actual detonation.
    
    	The programs could/will also be used to simulate car accid-
    	ents without actually piling up a Volvo into a brick will.
    

    No doubt, token rings will be used.

re: -1  

No doubt. This must've been awarded due to the tremendous
level of expertise and competence they demonstrated with their
systems at the Olympics.

Either that or some graft.