International Business Machines Inc. reported Thursday that it earned a record $2.17 billion in the final quarter of 1984, by far the largest quarterly profit ever posted by an American company, while other computer makers reported mixed results.
IBM's earnings in the final three months of the year were up 16.6% from the same period of 1983. For the year as a whole, the Armonk, N.Y.-based firm said it earned $6.58 billion, an increase of 20% over the previous year.
Cupertino, Calif.-based Apple Computer Inc. said its profits in the three months, the first quarter of the company's 1985 fiscal year, increased eightfold to $46.1 million.
Tandy Corp. said its profits slumped 24% in the period, to $76.5 million, while profits at Honeywell Inc. were off 64%, to $31.8 million, as a result of a one-time charge related to discontinued operations.
Industry analysts said that IBM's performance in the quarter was slightly better than had been expected and that the company would have been even more profitable had foreign earnings not been eroded by the dollar's continued strength.
"They're doing better with costs and expenses than I thought they could do," said Jay Stevens, an analyst with the Wall Street firm of Dean Witter Reynolds Inc. "Considering the pressure of the dollar, it was a remarkable performance."
The company estimated that it would have earned an additional $690 million in the fourth quarter if the exchange rate between the dollar and other foreign currencies had stayed the same as in 1983. Roughly 40% of the company's sales are in foreign countries.
Analysts said the current glut of personal computers in retailers' inventory isn't expected to have much effect on IBM's 1985 results.
However, Apple Computer's earnings in the first three months of 1985, the company's second fiscal quarter, are expected to dip sharply while retailers trim their inventories before ordering new shipments of personal computers. Apple President John Sculley said December sales were below dealers' expectations, leaving retailers with a higher-than-anticipated inventory of Apple products.
"This factor, along with the continuing industry transition through a fragile and very competitive marketplace, will make the next quarter extremely challenging," Sculley said.
Thomas Rooney, an analyst with DLJ Securities Inc., said the decline in consumer demand for personal computers will force Apple to move more quickly to attract business customers to its line of products.
"The company's success in 1985 will hinge on its ability to penetrate the business sector with new products," Rooney said.
Apple executives are expected to unveil a range of new products oriented to business use at the company's annual meeting Wednesday.
The Christmas boom in sales of home computers didn't help Fort Worth-based Tandy. The company, which sells its computer products through its Radio Shack retail outlets, said sales in the quarter (the second of its fiscal year) fell slightly from the year-ago period, to $893 million, primarily because of competitive price cutting in the personal-computer business.
Honeywell, based in Minneapolis, said operating earnings in its fourth quarter rose 7.3% to $110.4 million, but the company took a charge of $78.6 million to cover a write-down of its Synertek Inc. semiconductor unit, which the company has announced that it will sell. For the year, Honeywell earned $239 million, compared to $231.2 million in 1983.
Tiger International Catching a fleeting glimpse of profits for the first time in four years, Los Angeles-based Tiger International Inc. reported income from continuing operations for 1984 of $44.2 million, compared to a loss from continuing operations of $84.99 million in 1983--a turnaround that reflected improved operations at the company's remaining subsidiaries, Flying Tiger Line Inc. and Warren Transport Inc.
But a late-year dispute with a bank group and the sale of an unprofitable trucking subsidiary caused a loss from discontinued operations of $133.1 million, which resulted in a 1984 net loss of $88.9 million, compared to a $222.8 million net loss in 1983. Revenue rose 14% to $1.2 billion in 1984.
In the fourth quarter, Tiger had a net loss of $95.3 million, compared to a net loss of $78.7 million in the same period of 1983. Income from continuing operations rose nearly 509% to $28.4 million and revenue increased nearly 6% to $326.6 million.
Tiger said it chose to write off its entire investment in North American Car Corp., which was included in discontinued operations. It said it is negotiating with North American Car and its bank creditors to settle a $132-million obligation.