View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
November 18, 1993


By CBR Staff Writer

It takes many views to make a market, and perceptions of IBM Corp are beginning to diverge wildly as Merrill Lynch & Co analyst Daniel Mandresh raised his long-term investment rating to Buy from Above Average, citing the potential of the PowerPC chip, adding that he is comfortable with his fourth-quarter earnings estimate of 52 cents a share for IBM; over at PaineWebber Inc however, Stephen Smith is a lot less sanguine, highlighting the area that seems to us to be IBM’s biggest triumph of hope over experience – services: he points out that IBM’s gross margin on services is a slim 13%, and sees pressure on margins in this area, and in maintenance and software; he notes that while IBM will still have general, selling and administrative expenses of $15,000m to $16,000m to cover next year, as well as $5,000m in research and development, and does not think the company can show earnings per share anything near the $4 to $5 indicated by the current share price; he adds that a mere three percentage point in gross margin means IBM loses money, and on services quotes even the company’s own chief financial officer saying that Integrated Systems Solutions Co making it clear that the cost structure here is unacceptable and that IBM must stop pulling so hard on the growth lever and start pulling on the profit lever.

Content from our partners
Scan and deliver
GenAI cybersecurity: "A super-human analyst, with a brain the size of a planet."
Cloud, AI, and cyber security – highlights from DTX Manchester

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.