After the usual jaunty opening by chairman John Akers, IBM Corp had nothing but gloom to report when it met analysts in New York yesterday: chief financial officer Frank Metz said that 1991 turnover will be our greatest disappointment and gross profits will be hurt by lack of growth in software and hardware revenue, product transitions at the high end, and competitive forces. The personal computer business will be down about 10% to just under $9,000m, RS/6000 will grow only 60% this year from its very low 1990 base, and only another 50% next year. Biggest shock is that IBM is reconciled to being a slow growth company: it sees long-term revenue growth of about 6% against 7% to 10% a year for the industry as a whole. Metz sees the long term gross margins in the 51% to 53%, lower than in the past, and around the level achieved by Apple Computer Inc. Metz emphasised that IBM has no reason at this point to cut its dividend. President Jack Kuehler sees only modest AS/400 growth this year after three years of double-digit growth. Metz also said that IBM will increase its debt by $1,500m to $2,000m because of the projected earnings shortfall, but called it a one-year problem, an aberration. He saw no increase in debt necessary in 1992, except for IBM Credit Corp. Finding that its large systems customers increasingly resent having to pay for services they don’t want, IBM Corp senior vice-president Terry Lautenbach said the company would move rapidly to a fee-for-services plan large-system prices presently include cost of support.
