IBM said Tuesday that it plans to halt production of its PCjr home computer indefinitely because supplies will be ample to meet weakened demand.
The announcement signaled that the PCjr was not exempt from a sharp slowdown in sales of home computers after a strong Christmas selling season, analysts said.
"There was a great deal of speculation that inventories were excessive, particularly the PCjr," said Eugene Glazer of Dean Witter Reynolds Inc. "This confirms that was correct."
A week ago, Apple announced that it would halt production of its personal computers for one week to bring inventories in line with sluggish demand, and it said then that there was "general softness" in the computer industry. (Apple has problems with a software supplier. See story, Page 2.)
At that time, International Business Machines Corp. said sales and demand for its personal computers remained strong across its entire product line. But on Tuesday, IBM said it would complete its current PCjr production scheduled sometime in April, "when inventory is projected to be sufficient to meet anticipated demand for the product from retail, large account and education customers."
"Yes, sales have slackened," said John Pope, spokesman for IBM's Entry Systems Division, the Boca Raton, Fla.-based unit responsible for IBM's personal computers. "For a product such as PCjr, the peak season is the fourth quarter."
Pope said there were no current plans for when production might be resumed, and he otherwise declined comment on IBM's projections of PCjr sales. IBM said it would continue to make PCjr cartridge programs, spare parts and options, such as memory-expansion products and power-supply attachments. IBM also said it would continue to market, service and fully support the PCjr.
Demand for the PCjr and other home computers was robust in the final quarter of 1984 and retailers heavily stockpiled the machines, thanks in part to price discounts and other promotions offered by the machines' manufacturers.
But after strong Christmas sales, "our numbers indicate sales of home-computer products, including the Apple II and PCjr, dropped significantly on the order of 65% versus December," Michele Preston of L. F. Rothschild, Unterberg, Towbin said recently.
The result was excessive inventories of home computers in retail channels. Office personal computers--where IBM's efforts are primarily aimed--were not affected as negatively, industry observers said.