Britain’s Princesses Royal are rumoured to do it, joined (if the suspicions are justified) by enough of their subjects to provide a livelihood for 42 professional practitioners. And no wonder. Colonic irrigation therapist Katherine Monbiot told London’s respected Independent newspaper that the British are the most constipated nation in the world. Why, added the enematic expert, women come to me who are going to the loo once in three weeks. The medical profession may poo-poo the practice, but London’s Colonic International Association remains firmly entrenched in its beliefs. As nutritionist Roger Groos told the Independent’s health reporter, one reward experienced by many patients is the uplifting of your spirits afterward. This is far more than most of the newspaper’s readers normally get from their daily journal, with its persistent emphasis on such dreary topics as politics and business, although at $75 a treatment, irrigation does cost a hundred times as much. But how often does your newspaper leave you, as it did one rectal recreationist, talking about a wonderful release of energy? If only IBM could relieve itself so easily, and with such sublime satisfaction. Well, perhaps it has. Although all the evidence suggests the company could not find its most appropriate place for treatment with both hands, IBM’s management has proclaimed not only another corporate evacuation but also a rearrangement of the very bowels of its business.
Down the drain
And it has done so just in time. Production has been severely impacted and profits have gone down the drain. Within the company, stool pigeons have turned over to the media nasty doggerel and other corporate blasphemies circulating on internal networks. Credit evaluation agencies have threatened to put the squeeze on IBM’s bond ratings… merely because the company isn’t taking in enough cash to pay for its dividends and expenses. The body blow to IBM’s heretofore unsullied creditworthiness awaits the company’s official figures, but it now seems almost inevitable. Nor is it clear that IBM’s $4.84 annual dividend is sacred, despite the promises of chairman John Akers. In the recent past, Akers has described IBM’s business as solid, when in fact it was falling apart; he has appointed executives and anointed them with praise, only to ease them out when he needed scapegoats; he has publicly blamed IBM’s woes on economic conditions while privately lambasting employees and departments whose performance proved embarrassing; and he has proclaimed one turnaround after another for his company while neglecting accurately to characterise its magnitude as 360 degrees. If Akers isn’t a prevaricator, he’ll do until the real thing comes along. Trust is very important in financial circles. Wall Street’s evaluation of a company is based as much on faith in the future as it is on past performance. So, it was hardly surprising that IBM’s effort to explain itself to the investing public early in December resoundingly backfired.
By Hesh Wiener
IBM finally admitted it was in trouble, but did so with inappropriate obliqueness. Chairman Akers tried to minimise the mess his company was in, while his minions, one after another, damned IBM with nearly every detail of their satrapies’ disappointments. In the midst of this disaster report, Akers unveiled the outline of his plan to break up IBM, rendering the company into newly responsible divisions defined by their products and services. Sadly, to most of those present, the scheme sounded not like an act of triumph but rather one of triage. In the aftermath of the meeting, shareholders dumped their holdings, plunging the price of an IBM unit on the Big Board to its lowest level in a decade. Simultaneously, the company’s lone unionist, hidden somewhere in the IBM plant in Endicott, New York, put out an issue of his occasional organising newsletter, The Resistor. He cleverly points out that after IBM cuts 10% of its employees, a whole lot of people will find themselves in the new bottom layer – ready to get canned. This dire prediction will fal
l on many sympathetic ears, as IBM now seems habituated to one-time charges for staff reductions that have been made with impressive regularity during the past few years. While the chances of a victory for organised labour within IBM seem infinitesimal, so, too, did many of the other recent events that are now established facts. Nor is the presence of one particularly vocal dissident in the ranks of IBM something that the company’s customers can afford to ignore. As antipathy grows within IBM, customers will bear the consequences. Where once an IBMer had been the quintessence of Can Do, dependent users will find Won’t Do. Where once had thrived a spirit of co-operation fusing vendor and buyer there will arise an uneasy, possibly distrustful and very likely reluctant acceptance of common burdens. This degenerate remnant of a formerly productive bond between Big Blue and its clientele will bring great harm to all the involved parties – IBMers, users, shareholders and the employees of every business that feeds on the fruits of its automated systems. Conditions may have deteriorated so far that IBM itself can no longer engineer the required rescue. Nor can the customers that wish so ardently for the return of the better times they accurately remember. But the game is far from over. IBM’s effort to give more autonomy to its disparate systems and peripherals product groups may prove far wiser than any of the company’s executives have yet imagined. Unfortunately, the changes that will arise cannot be predicted and even if they were readily foreseen, could not be well-controlled. IBM’s AS/400 business is pretty healthy.
Dungheap
Even though IBM has a lock on both hardware and system software, customers are pleased with the results they get from the machines. So far, whenever AS/400 orders have dropped, IBM has boosted price-performance. We believe that the margins on these machines are satisfactory, too. We similarly have great faith in IBM’s emerging storage subsystems business – if it can ditch the 3390 cartwheels in short order. Even the RS/6000 line, vastly overrated by stock analysts, may have a bright future if it can be dislodged from the PS/2 dungheap. IBM Credit Corp is at risk. We doubt that it will be adequately protected by IBM’s efforts to control independent upgrades. It will take a beating when IBM’s bond costs go up. It will face increased residual value exposure as IBM’s more aggressive divisions roll out new products faster than current corporate considerations might dictate. And IBM’s mainframe business is in terrible shape – not because personal computers are eating the market, not because Unix machines are making MIPS into merchandise, but because IBM’s processors are not good value. If and when IBM delivers machines that are cheap enough to attract business, the mainframe market will grow. If IBM cannot do this, customers will be forced to do their work in other ways. And then the problematic mainframe business may have to be flushed. If this terrible event comes to pass, the careers of executives that have concealed the waste in IBM’s mainframe business will be sealed – just like the fate of Ananias.
Copyright (C) 1991 Technology News of America Co Inc. All rights reserved.
