International Business Machines Corp’s chairman Louis V. Gerstner Jr, has told industry analysts to expect double digit growth from IBM over the next few years, primarily driven by the group’s services business. But the evidence won’t appear until late 1999 at the earliest, he warned, speaking at his fifth annual analyst’s briefing. IBM achieved revenues growths of just 3.4% last year, and 5.6% the year before that, and last year at this same event, Gerstner defended IBM’s low revenue growth by explaining how difficult it was for a company of this size to emulate its more nimble, faster growing competitors. But this year, he talked animatedly about the services division which he says can sustain its current 20% plus revenue growth rates. Services now account for a quarter of IBM’s annual $79bn in revenues. Gerstner also highlighted IBM’s successful component- hardware division which has excelled with 20% revenue growths. And the controversial tactic of pouring millions of dollars into share buy backs to boost earnings per share will continue, says Gerstner, despite criticism from outsiders who question the ethics of senior executives selling vast tranches of their own holdings in the middle of such a large scale repurchase program.
