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May 4, 1994

GERSTNER, MIFFED AT APPLE FIRST WITH POWERPC, SEES SOUND FINANCIALS BY 1996

By CBR Staff Writer

Louis Gerstner reckons that IBM Corp’s finances will be on a firm financial footing within two years – but he is not pleased that Apple Computer Inc has beaten IBM so thoroughly to market with machines built around the PowerPC RISC, and he thinks the InfoBahn is being over-hyped. These points emerged in an interview with Der Spiegel. He told the German weekly that IBM could possibly report a profit for all of 1994, but was not making any forecasts; he noted that IBM, where he is chairman and chief executive, had made a profit in both the last quarter of 1993 and the first quarter of 1994. I think that IBM will be on a firm footing financially again within two years at the latest and that we will be the leading supplier in a whole series of key markets, Gerstner added. He expects to launch personal computers designed around the PowerPC computer chip by the end of this year, and did not know why Apple had succeeded in launching its rival products earlier than IBM. Of course it is very annoying for us because we are the only manufacturer of the chips, Gerstner said. But I expect that we will have our products on the market at the end of the year at the latest. On the development of Information Super-Highways, he was sceptical. I believe the potential is exaggerated, he told Der Spiegel. The home market will definitely develop more slowly than most people assume. He said IBM was concentrating on satisfying its customers rather than talking about things which are still totally unclear and immature. No-one knows if television viewers even want to have 500 channels and what they are willing to pay for it, he said. Technologically, information highways were nothing new and the present discussion was about the content of such services. Of course we will be involved. Without our technology and our computers the information highways cannot be built. But we have no ambitions to get into the programme business – we will leave that to others.

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