Because of IBM Corp’s flight from South Africa in the twilight days of the apartheid regime, and prompt return as soon as President Mandela was elected, IBM South Africa Group Ltd remains a quoted company in which IBM Corp holds only about 50%. The share price had the wind knocked out of it yesterday when the company reported worse than expected figures, and slumped 315 cents at R14.25 after touching a morning low of R13.50. The company reported net attributable profit down 27% at the equivalent of $16.6m, and put most of the blame on the misbegotten PC100 remember the PC100? It was to be the super-low- cost personal computer, cheap and cheerful, intended to meet the needs of less developed markets. Unfortunately, IBM has never learned the trick of giving such markets what they want without patronizing them with intolerable screens, untouchable keyboards, or some other cost-cutting measure that renders the machine deeply unattractive, however low the price. These results are extremely disappointing in the light of the overall growth trends in the South African market and IBM’s global success, the company said. The PC100 cost the company a considerable amount of money, and has now been withdrawn from the market. The company also blames the fall in profits on investment in skills to address new business opportunities, which did not produce short term revenue returns. The results are lower than expected. IBM finds itself in the wrong sector of the IT industry. It’s focused more on the hardware side where there is no growth at the moment, one dealer commented. The software sector is where things are picking up, he added. IBM Canada is the only major IBM country operation to get out of hardware altogether. Another dealer said the worrying thing for the market was how much stock IBM still held of the failed new low-tier personal computer, which encountered fierce competition from those that had addressed the low-end market for several years.
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