Wall Street has belatedly woken up to those problems that IBM has been having with the Thermal Conduction Modules for the new 3090 S models that we told subscribers about last month (CI No 1,119), and the IBM share price was hit on Tuesday as SoundView Financial Group analyst Stephen Cohen revealed the problem. But sources in the US third party market believe that IBM has been turning the set-back to its advantage by diverting the majority of the good TCMs it is producing to new-build CPUs rather than upgrades. The effect of this is that users that have E-to-S upgrades on order are being told that they will have to wait – but can have an S much sooner if they take a new one. Those who feel they must have an S are therefore having to dump their Es on the used market, driving down resale values. That in turn is tending to panic base model or E users who didn’t feel the need to go to an S to order an upgrade simply to preserve the value of their investment, so that whatever the short-term setback to IBM’s figures, in the medium term, the problem is tending to further IBM’s objective of stampeding users to upgrade to the S models. As to the problems, yields have been lower than expected on logic chips for the S models – likely as a result of the company having been caught on the hop by Amdahl Corp’s trumping all its aces with the 5990-700 and 1400 so that it had to rush the S machines out. The problems have caused SoundView’s Cohen to be less certain of his $1.80 a share first quarter forecast; he still looks for $11.25 for the year. IBM acknowledges the problem, but says it affected shipments, mainly of upgrades, only in the early part of the quarter, and that it is essentially behind us now. It acknowledges that it may hit its first quarter results, although it won’t affect full year figures.
