It’s easy to get too sunk in gloom over IBM Corp – the personal computer business may still not be on song and may still have to respond to the latest round of price cuts as sales in Germany and to a lesser extent the US go off the boil, but hey, the world is coming our way, chairman Lou Gerstner told analysts at the company’s annual briefing. He is satisfied that IBM’s traditional strength as a global maker of complex systems would make it a major power in the era of network computing growing out of the proliferation of the Internet. Everything you have been reading and hearing about the Internet plays to our strengths, said Gerstner. He has bought big into the Larry Ellison vision of a future in which computing power will migrate from the personal computer to the server, and predicts that the economics of the business will change as software is bought by subscription rather than as a retail product for the personal computer. As a result, digital transactions on the network will skyrocket and IBM will benefit because we are the server company. The services company will also benefit, since he sees IBM implementing many such server systems for large customers and communities. At $12,700m in sales last year, the services division is now second only to hardware as IBM’s largest source of revenue. Analysts said the presentation was the most upbeat he has made since taking over IBM in April 1993, addding that they were impressed by his frankness, particularly when he returned to questions other executives had answered with less candor. But the market, which has been even more gung-ho than Gerstner was on Monday when it comes to the share price, suddenly got cold feet. Having climbed 43% from the start of the year to a high of $128.875 early last week, the share price fell $2 to $116.125.
