IBM Says Its Demand Will Remain Steady

From Reuters

International Business Machines Corp.'s top executives spent Thursday reassuring securities analysts that there has been no change in demand after unexpectedly warning last week that the computer maker’s 1989 earnings may not meet expectations.

“We have not changed our basic view of demand for the IBM company in 1989,” Frank Metz, IBM’s senior vice president of finance, told securities analysts. “I do not see a demand problem in any of the major areas” of operations.

Metz said the company expects “all our major product areas” to keep pace with the overall growth rate of the computer industry, which IBM is projecting at 10% or more for this year and next.

Chairman John Akers was equally upbeat, saying the company’s overseas business is growing with the industry as a whole, although U.S. revenue is slightly below the rest of the industry, as it has been for a few years.


“We’re planning growth for this year. We’re planning for growth next year,” Akers said in response to numerous questions from nervous analysts.

Last Friday, Big Blue stunned the financial markets by announcing that it may have difficulty meeting the high end of the range of analysts’ estimates for its first-quarter and 1989 earnings. Its stock tumbled $5.625 a share that day and then an additional $3 Monday after analysts lowered their ratings on the company.

Shares of IBM rose 37.5 cents to $109.625 on the New York Stock Exchange on Thursday.

Earnings estimates for the full year had ranged from $10.50 to $11.25 a share, compared to $9.80 a share earned in 1988. Most IBM watchers dropped their estimates this week to between $10.50 and $10.75 a share.