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December 13, 1987

JOURNAL DEALS IBM ANOTHER BLOW WITH BEARISH PIECE ON 9370

By CBR Staff Writer

IBM shares slipped another 87.5 cents to $110.125 in early trading on Wall Street on Friday following another very bearish piece on the company in the US edition of the Wall Street Journal. Subject this time was the evident failure of the 9370 – the most important product from IBM for the past five years according to George Colony of Forrester Research – to live up to early expectations. It’s a big disappointment, Colony told the Journal, no-one is enthusiastic about it. The 9370 has made a disappointingly slow start, echoed Ulric Weil of Weil & Associates. IBM insists that is pleased with the initial reaction from customers, but the consensus among analysts is that the machine is too difficult to use for small shops, there are too few applications tailored for it, it is too difficult to network it with other machines, especially personal computers, and the operating system eats up all the power of the smaller models. Analysts who originally expected IBM to get 8,000 away this year have scaled down that target to 4,000 – compared with IBM’s own forecast of 5,000, and are now looking for only 14,000 next year where the consensus figure had been 20,000. IBM is expected to fix many of the perceived problems over the next 12 to 18 months, notably with a new easy-to-use version of VM next year, but the primary target of the 9370, DEC’s VAX family, won’t be standing still in that time. A Gartner Group analyst told the Journal that he was beginning to worry about the optimistic forecasts that had been made for IBM in 1989.Coincidentally, IBM, which has suddenly taken to putting out up-beat press releases reporting individual sales of System 36s, on Thursday put out one of the first such on the 9370, saying how happy former bureau user Richard Leahy Corp, Silver Spring, Maryland is with the box, its first in-house machine.

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