Our analysis of what John Akers must have been saying when he said he only believed that the fourth quarter would be the best of the year – that business is absolutely horrible since the fourth quarter normally accounts for a third of total business, seems finally to have registered on Wall Street, and IBM Corp’s shares traded as low as $90.625 before recovering a little to $91.125, off 1.625 in very heavy trading: immediate trigger was that SoundView Financial Group analyst Stephen Cohen downgraded his short-term rating to hold from buy, saying that the good news he had been anticipating failed last week to boost the stock; he also told the firm’s sales force that he plans to review with a downward bias his already lower-than-average earnings estimate of $7.50 a share for 1992; expectation that IBM would renew efforts to cut costs through further headcount reductions and a faster-than-expected ramp-up of the new Summit mainframes was the basis for his going to a short-term buy in July, Cohen told Dow Jones Professional Investor Report; he now believes that IBM’s new Summit mainframe cycle will prove shorter-lived than bulls expect and he is worried about pricing pressures in IBM’s mainframe disk business, as competitor Hitachi Data Systems Corp just began shipping its own top-end drive and as Amdahl Corp starts shipping its new disk this month; Cohen has not chnaged his $4.00 a share forecast for this year – that’s before charges, but says he is concerned about revenue growth in 1992 – his estimate for next year of $7.50 a share had assumed turnover of $70,000m, or 6.5% to 7% growth, he declares.
