Taking almost the last of the superficial gloss off IBM Corp’s year-end 1994 figures, the Wall Street Journal, following up a Computer Reseller News story, yesterday asserted that the IBM Personal Computer Co made a stunning loss of $1,000m – some $600m from writing down old inventory – last year on $10,000m of sales as it slipped to second place worldwide and fourth from second in the US – and put the man at the top, Richard Thoman, firmly in the firing line, citing his overly conservative sales forecasts as well as manufacturing problems for hundreds of millions of dollars of sales that were never made in the fourth quarter. It also characterises the transition to the PC700 and PC300 lines as bungled and suggests this was in part because Thoman imposed a sweeping overhaul of the division in the midst of the major product transition. The crucial point about the enormous loss is that it means that the year-end profits IBM reported were of an even lower quality than had been assumed, since an even greater proportion of them than observers had surmised must have come from businesses that will disappear over the next two or three years, principally mainframe software, where the consensus is that IBM will have to massacre prices to make the parallel CMOS mainframes competitive. International Data Corp reckons that IBM shipments actually dropped by 4.7% to 4m in a world market that grew 27%, and the slide is thought by some to be continuing as key products remain scarce. Thoman had no experience of the computer industry, coming from RJR Nabisco Inc, where he marketed biscuits, after seeking cardholder accounts for American Express Co.
