IBM falls $US397M

Press, 15 October 1986, Page 41

IBM falls $US397M

NZPA-Reuter New York International Business Machines Corporation, the world’s largest computer maker and America’s most profitable company, said its earnings fell 27 per cent, or SUS 397 million, in the third quarter.

Citing a fall in world shipments and orders, IBM said that for the period ending September 30 net earnings were $U51.077 billion, down from SUSI. 47 billion for the corresponding period a year ago. “Growth in our world trade operations has begun to moderate,” said the chairman, Mr John Akers, "and we have yet to see a turn in the weak

North American business environment we have experienced in the last year and a half.” The pressure on earnings had been anticipated earlier and IBM stock initially rose in active trading on the New York Stock Exchange, up one to more than SUSI 24. The shares had recently fallen to the year’s low of SUSI 22 as word circulated that the earnings would be down. In previous quarters, growth in the world operations had propped up IBM earnings, while North American operations were mired in a slowdown. During the quarter, indications of IBM’s

troubles were also given as the company announced aggressive plans to reduce the workforce through early retirement incentives, plant consolidation and other staff adjustments. Analysts said a slowdown in capital spending and strong pressure on the industrial sector of the economy in the United States have kept a lid on IBM’s results. There are no clear signs that the sector is due for a rebound. Also depressing IBM’s earnings are strategic failings by the company, especially in the mid-range com- „ puter market, they added.