Just before we closed yesterday, IBM Corp chief financial officer Jerome York told financial analysts that one of IBM’s major objectives in 1995 is to grow revenues faster than in 1994; he said the company ended the year with just under 220,000 employees worldwide, just shy of the original goal of getting the worldwide workforce down to 215,000 and while it might bottom out at that figure, employment is likely to start growing again soon – right now, IBM needs the additional employees in growth areas, particularly in computer services, he said; during the fourth quarter, the devaluation of the Mexican peso, combined with costs it took for replacing the flawed Pentium chips together cost IBM about $50m on a pre-tax basis, split evenly between the two; he said personal computer revenues overall were down slightly, but did not give figures – I can assure you that there is an excruciatingly high sense of urgency there, York said – This is one-sixth of our business and it’s underperforming mater ially.
IBM Corp’s gross margins for services in 1994 improved to 20% from 14.7% in 1993, suggesting that the company may have approached break-even on the business in the fourth quarter, when the margin improved again to 23.7%; elsewhere, gross margin on hardware in the year was 34.1%, up from 32.3%, but it is slipping on software, where IBM is being forced to be less greedy – it fell to 58.8% in 1994 from 60.7% in 1993; maintenance margins slipped to 49.7% from 51.4% a year ago.
Novell Inc has roped in AT&T Corp’s Global Information Solutions to help with its SuperNOS marriage of NetWare and UnixWare, PC Week reports: AT&T is expected to contribute symmetric multiprocessing.
As businesses struggled back to work and the official toll in Japan’s horrific earthquake climbed to 5,0002 with over 26,000 injured, office buildings in Kobe were shaken by a strong aftershock on Monday evening, but there was no immediate indication of its magnitude or any report of injuries; Japan’s largest maker of silicon ingots, Sumitomo Sitix Corp, which inter alia is one of three suppliers to Intel Corp, restarted its plant in Kobe after six days once running water was restored; Sharp Corp reports that its liquid crystal diode other component factories suffered no apparent damage and continued to operate, with supply lines open; less lucky was the Himeji-based Display Technologies Inc joint venture of IBM Corp and Toshiba Corp, where two production lines suffered damage, and it was forced to shut down for repairs, said an IBM spokesman in Tokyo; the company has no inventory of the 10.4 active matrix displays, shortage of which has crimped shipments of IBM’s ThinkPads, so the supply situation is likely to get worse; Apple Computer Inc said its suppliers of liquid crystal displays are still assessing the damage and it is too soon to evaluate the long-term impact on supply.
A disturbing indication of just where IBM Corp’s profits are coming from is the fact that research and development as a percentage of revenue fell to 5.6% from 7.5% in the quarter and to 6.8% from 8.9% in the year, and while in the past, much of IBM’s research has been wasted as the company sat on its patents rather than exploiting them, anything below about 7% of sales looks too low for a high-technology company; the cut in research and development for the year amounted to about $1,350m.
Shares in Racal Electronics Plc were up sixpence at 232 pence yesterday in response to a piece in the Sunday Times that raised the possibility the firm may be looking to sell its data communications business, but a Racal spokesman denied that the company is in discussions on disposal of the unit.
Sony Corp’s Sony Electronics unit formed a Sony Wireless Telecommunications Co to design, manufacture and market wireless telecommunications products for the US market.
Lucie Fjelstad, formerly IBM Corp’s multimedia supremo, has resurfaced at Tektronix Inc, where she is to be president of the Beaverton, Oregon firm’s Video Systems Division
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A few years ago, Eurosclerosis was a term widely bandied about, but these days, outside the UK, few people in Europe seem to worry that the continent is rapidly pricing itself out of world markets with misguided employment protection measures and onerous burdens on job creators, but Lucio Stanca, chairman of IBM Europe addressed the issue at a conference on teleworking in Brussels yesterday, saying that the European Community risks being left behind in the race to develop information technologies unless it cuts its telecommunications costs and moves toward more flexible work practices – by protecting the old, rigid structures, Europe has everything to lose, Stanca warned.
The Bavarian state government lined up behind Viag AG yesterday to demand an early end to Deutsche Telekom AG’s monopoly on basic telephone services, Reuter reports: Bavarian state premier Edmund Stoiber told a meeting of around 200 Viag executives that Germany’s private phone companies could not wait until 1997 to jockey for position in the fast growing communications market – we need to break the monopoly step by step so that new carriers can gather experience before they enter the arena with deregulation of networks in 1998.
The International Maritime Satellite Organisation announced in London yesterday that it now has the first stage of funding for its global $2,600m satellite mobile telephone system in place; members have committed some $1,400m of funds and it will now seek further cash from non-members looking to take stakes in the project, which will be run by a new company, Inmarsat-P; participating members include China’s Beijing Marine & Navigation Co, Colombia’s Empresa Nacional de Telecommunicaciones SA, the Societe National des Telecommunications du Senega, and Comsat Corp with $147m; Deutsche Telekom AG’s DeTeMobil cellular division still has to make up its mind, but the Dutch, Spanish and Swiss partners in Unisource BV are all investing; Kokusai Denshin Denwa Co Ltd said it and 20 other Japanese companies will invest $93.8m for a 6.7% stake; Inmarsat will award contracts for construction of 12 satellites and development of earth stations this year, and decide on handsets later on.
Bad luck if you happen to be called Bob – it could cost you a bob or two: a spoof press release – well we hope its a spoof – circulating on the Internet says that now Microsoft Corp has trademarked the name Bob for its reportedly cringe-making user interface and applications for gonzos, anyone hitherto called Bob must now either change his name or license it back from Microsoft on reasonable terms…
