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March 31, 1987


By CBR Staff Writer

The 1986 figures for IBM Japan are belatedly in, completing the dismal picture from the company’s three biggest markets – the other two are the US and West Germany – that together gave IBM Corp one of the worst years in its history. IBM Japan reported profits down 11.8% to the equivalent of $819m on turnover down 3.9% to $6,060m. 1986 was IBM Japan’s second consecutive weak year – up to 1985 it saw five straight years of double digit growth in sales and profits. According to the Computerworld newswire, IBM Japan Ltd president Takeo Shiina attributed the firm’s poor financial performance to sharp declines in orders placed by leading manufacturing companies, which account for some 40% of IBM Japan’s sales. According to Shiina, manufacturers have curtailed investment to offset their own overseas losses caused by the soaraway Yen. The rising Yen also hit exports, which fell 8% to $1,620m. IBM Japan’s domestic sales declined for the first time in seven years, falling 2.4% to $4,430m. Reasons for the poor performance are said to include large discounts on 3090 mainframes sold to universities, and patchy sales of the IBM Japan 5550 multi-tasking personal computers – but there is also evidence that Hitachi and Fujitsu have been making inroads into IBM’s mainframe heartland with their IBMulators. A few weeks back, the key compatible rivals were reporting unexpectedly strong orders for their new M680 and M780 lines (CI No 630). Any trend like that is only likely to accelerate if trade friction grows between the US and Japan. IBM Japan’s strategy for improving its 1987 performance is to go all-out after the banking and financial markets, the one sector of the Japanese economy that is still booming. New mainframe business has been won this year with Nomura Securities and Nippon Life Insurance.

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