The IBM Credit Corp unit of IBM Corp in While Plains, New York reports that third quarter net profits rose 34% to $71.6m, but the company is rapidly becoming a source of finance for equipment resellers rather than for users of large mainframes – and even large mainframes are small these days, and scarcely worth leasing because they can be expected to have no residual value after about three years. Capital equipment financing originated for end users in the third quarter rose 18% to $1.19bn, but working capital financing originated for distribution channels grew by 42% to $3.6bn, so it is very convenient that this new source of business has turned up for IBM Credit – for much of its life, the company wrote nothing but customer leases. The return on average equity in the third quarter was 22.9%, up from 21.7% a year ago. For the first nine months of 1996, net earnings rose 25% to $219.6m, with user leases rising 17% to $3.69bn and working capital financing rising 31% to $9.29bn.
