The most noteworthy feature of IBM’s second quarter figures, once one has tripped one’s way through the minefield of charges $600m pre-tax in charges for the plant closures and restructuring, and a benefit from applying the Financial Accounting Standard 96 to deferred taxes, is that the strong growth rate in the first quarter of 10% – albeit applied against a rotten first quarter 1987 – has not been maintained, and growth slipped back to 6.25% in the second quarter: factors no doubt include the beginnings of a reversal of the beneficial effect of the weak dollar in the first quarter, and possibly the big German market starting to go ex-growth. Breaking down the figures, outright sales were up 7.5% at $9,150m, only about half the 14% or so growth rate achieved in the first quarter; growing competition and IBM’s intensifying fight to retain and build market share meant that maintenance revenues were down 3.2% at $1,866m – they were off 4.2% in the first quarter; software business grew 15.3% to $1,763m – it was up 21% in the first quarter; rentals and other services, scarcely worth reporting separately any longer, were down 1.3% to $822m. The chairman’s statement was bland and non-committal to a fault: Our business continues to improve as a result of actions to be more competitive, and customer response to our recent product announcements has been positive, John Akers said. Our ongoing drive for efficiency and competitiveness and our continuing commitment to customer partnerships give us confidence for the future, he added.
