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  1. Technology
October 2, 1991


By CBR Staff Writer

In New York, the tabloid newspapers have been headlining the preconnubial woes of Donald Trump. Trump is a real estate magnate with a knack for publicity that lately exceeds his skill at keeping financial empires intact. In September, his romance with a model named Marla Maples ran into some difficulty. Mr Trump and Miss Maples have twice planned marriage and as often reconsidered the proposition. Their most recent engagement was signalled by a very large diamond ring. This traditional gesture was, according to various accounts, arranged in a rather creative fashion. Instead of buying the ring, according to some stories, Mr Trump borrowed it from Harry Winston, a jewellery shop on Fifth Avenue. Other reports suggest that the ring was indeed purchased, but that Mr Trump hadn’t yet gotten around to paying the bill because he has been very busy with one thing or another. Whatever the case, we are confident that the Winston firm would very much like the quarter million simoleons the ring is worth – or the ring itself. Actually, we suppose that the shop would like both, but will be happy getting either. Before long, the Trump-Maples nuptials could be back on the social calendar. All it would take is a bit of the sweet sentimentality that the two celebrities must have experienced during their previous spat… and renewed willingness on the part of Winston once again to take Mr Trump’s marker for the sparkler.

Flighty lovebirds

While many emotional people who cannot easily decide whether to stick with their commitments must identify with the The Donald’s ducking out, few can claim as much sympathy for the flighty lovebirds as IBM’s mainframe sales reps. They have been romancing corporate clients who happen to have enough swag to pay for a 9021 mainframe and, with the able assistance of financiers both inside and outside the IBM company a number of prospects who don’t have the cash but do display a willingness to sign eleven-digit IOUs. The goal of this courtship is clear: The ardent grey suitors want to carry heavy machinery across corporate thresholds by the end of the year. Not only will this put the individual peddlers in good stead with their paymasters, but it will also enable the good ship IBM to sail into 1992 without its bilges full of red ink. However, there is no saying that IBM’s presumed customers will stick to their commitments with any more conviction than the fickle Mr Trump and Miss Maples. There are a number of companies that have their names on IBM’s delivery list for reasons that include the suspect. For instance, an information systems manager here or there may have ordered a twenty-two million buck model 900 just to stop a persistent sales rep’s nagging. These and other well-intentioned customers may find their plans unexpectedly vetoed at the highest corporate levels, where executives don’t make their business plans using spreadsheets. Spreadsheets, particularly when occupied by business plans, have a consistent quirk: no matter what numbers you punch in, cash flow always turns positive in eighteen months. The financial and managerial types who happen to run most big businesses don’t truly believe in spreadsheets. Their flimsy excuse for this obviously silly attitude is that their companies are in trouble right now, largely due to past faith in spreadsheets that showed cash flow would turn positive in eighteen months.

By Hesh Wiener

Immune to the Spreadsheet Effect, captains of industry may impose their opinions on information processing executives. Faced with a memo that suggests their company swiftly purchase a mainframe that costs more than the gross domestic product of the Democratic Republic of Sao Tome & Principe or the Republic of Kiribati, some otherwise charming executives grow testy. Our business in is the toilet, you wastrel, they explain to their enthusiastic computer experts. In modern corporate argot, this means that the transaction under discussion would best be deferred, as it is a busted flush. Well, maybe the sales rep is sensitive to such deep feelings lovingly expressed, and wil

l continue to treat the customer with tenderness. There may even be a bit of empathy hidden in the rep’s consciousness. After all, this has not been a good year for IBM, either, as the third quarter numbers will undoubtedly prove. Due to quirks in the motivational system used by IBM to control its sales reps, IBM’s bad year and that of its drummers are one and the same. This cruel linkage between employees’ accomplishments rather than their efforts is just a fact of life for marketing folk, and a pleasant one more often than not.Whatever the fate of the individual IBM account rep, the immediate future of the cohort does not look overly inviting right now. Chances are, IBM will ship a thousand 9021 engines this year, which works out to a couple hundred machines that have four or six motors apiece. At a list price of more than $3.6 million per engine, IBM stands to note $3.6 billion in its ledgers before it closes its books for the year. If, with luck and zealotry, the company does better, its employees and shareholders deserve acclaim. IBM will have overcome problems that are far worse than any of the company’s many fans would like to admit. IBM is already facing its first year of diminished revenue since 1946. From the look of things, the company is not even going to make as much in profit as it will pay out in dividends, and that reward to patient stockholders is the measly sum of $4.84 per share per year. It is even possible that IBM loses money for the whole year, but even the most cynical observer is loath to imagine that the company’s accountants lack whatever imagination it will take to keep Big Blue in the black. So IBM’s whole year may come down to events during the last few working days of 1991. If customers find that their year-end business is worse than anticipated, while the need to turn a profit is stronger then ever, there are only a few options open to them. The most obvious choice is to put off buying something that was, until the last minute, due to be purchased. Items that are not indispensable will be those eliminated. A company that is getting its work done must have mainframes; a new machine is unlikely to be indispensable.

Buying bricks

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During the past couple of years, IBM’s problems at home (such as losing money in its US operations for the full year 1989) were more than offset by success overseas. Now, business is moribund worldwide. IBM’s European profits depend most on Germany, and Germany is buying bricks, not MIPS. The rest of the continent is similarly lacking in enthusiasm for the concomitants of industrial growth, a conclusion reached by those that noticed that there isn’t any.Japan’s economy is hardly robust; even crime there doesn’t pay any more. The rest of the world presents a mixed picture at best, and whatever improvements IBM may achieve in its relatively healthy Latin American operations are, regrettably, not going to come to a hill of refried beans. Justifiably preoccupied by their own troubles, computer users should not spend too much time worrying about the fate of supplier IBM, which, like the redoubtable Mr Trump, has survived worse times than these and will unquestionably recover from its present slump. If the customer must develop an effective posture toward a great and proud company that is on its knees begging for a meaningful commitment, perhaps this notion will enable mainframe costs to be kept under control: kick it while it’s down.

Copyright (C) 1991 Technology News of America Co Inc

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