IBM Sees Strong Net in ’85 Despite Recent Dip
IBM’s unusual first-quarter decline in earnings will be more than offset by a surge in profits as the year unfolds, the company promised shareholders at its annual meeting Monday.
The nation’s biggest computer company also said it expects a “substantial increase” in shipments of its troubled AT personal computer in the current quarter, alleviating a shortage of the top-of-the-line desk-top machine.
“Despite what appears to some to be a pause in our industry, we expect our shipments to be strong in 1985, particularly in the second half of the year,” IBM President John F. Akers said.
Akers, 50, who took over as chief executive earlier this year from Chairman John R. Opel, predicted “solid growth in revenues and earnings for the year as a whole.” Analysts have expected the same.
IBM reported an 18% decline in earnings to $986 million, or $1.61 per share, for its first quarter ended March 31, on a 2% revenue gain to $9.8 billion. Akers told shareholders that those results “are neither up to your expectations nor ours.”
The falloff after years of rapid growth had been expected and was blamed on the strong dollar and a slowdown in orders for mainframe computers by customers awaiting details of IBM’s so-called Sierra generation of mainframes.
Akers said Monday that about $130 million, or more than half, of the year-to-year profit decline came in unfavorable currency exchange rates resulting from the growing strength of the dollar.
On mainframes, analyst Marc G. Schulman of Hambrecht & Quist, San Francisco, said IBM shipments in March--after the Sierra was unveiled--were double those of January and February combined. The new machines will become available in large volume in the fourth quarter, which will be “very strong,” Schulman said.
Analysts generally are forecasting full-year earnings of $11.30 to $11.80 per share, a respectable gain from last year’s $10.77 per share.
IBM didn’t elaborate on production plans for the AT, but an increase in shipments of the high-end machine would help the bottom line.