IBM Posts $2.8-Billion Loss in 3rd Quarter : Earnings: Results were the giant computer firm’s worst ever in a single period. Its stock fell 6.4% on the news.

International Business Machines Corp. on Thursday reported its worst-ever quarterly loss, a colossal $2.8-billion third-quarter deficit that stunned even the most pessimistic observers and triggered a broad selloff of company shares.

The giant computer maker blamed the dismal earnings report on huge, previously announced job cuts, weak economies in the United States and Japan and the recent currency turmoil in Europe.

IBM stock, one of the world’s most widely held securities, plunged to its lowest level since 1982. The company’s shares skidded $5.125, off 6.4%, to finish the day at $72.875 in New York Stock Exchange trading.

The collapse, which came on heavy volume of 8.3 million shares, amounted to a paper loss of $2.9 billion in market value for IBM’s long-suffering shareholders and led to renewed speculation by analysts that the company would be forced to cut its dividend.

But Frank A. Metz Jr., IBM’s senior vice president for finance, said in a conference call to securities analysts that the company has no plans to change its dividend. Company spokesman Rob Wilson elaborated on Metz’s comments by saying that IBM doesn’t plan to change the dividend “for the foreseeable future.”

At Thursday’s closing price, IBM stock yields a rich 6.6% annual dividend. An official at the New York brokerage Birinyi Associates said that even as institutions were dumping the stock, retail investors were snapping it up.

IBM’s dismal results reflected $4.4 billion in pretax charges to pay for plant closures and the elimination of 40,000 jobs through early retirement incentives. That announcement last month also led to a broad selloff in the company’s stock.

Without those charges, IBM would have reported third-quarter operating profit of $78 million, or 15 cents a share.

“That’s below anybody’s expectations, yours or mine,” Metz acknowledged in his conference call with analysts.

Wall Street estimates on IBM’s third-quarter earnings had ranged from 35 cents to $1 a share, with a mean estimate of 79 cents, according to the Institutional Brokers Estimate System.

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John F. Akers, IBM chairman and chief executive, said third-quarter business “was adversely affected by economic turmoil in Europe, particularly at the close of the quarter, and by persistent economic weakness in the United States and Japan.”

“Our hardware profits continued to be hurt by price pressures, especially within our personal computer line,” Akers added.

Analysts agreed that, as the fourth-largest industrial concern in the U.S. and the world’s largest maker of computers, IBM was in part a hostage of the feeble global economy. But some said IBM’s crisis was also of its own making.

“IBM wasted years failing to address the steepening long-term decline” in mainframes--the industry’s largest computers, said Thomas Rooney, a vice president at Donaldson, Lufkin & Jenrette, a New York brokerage. “Now they are really in a scramble mode.”

Not including special charges, Rooney calculated that IBM’s “normalized” earnings power is between $3 and $5 a share. “You are looking at a company that is going to have to cut its dividend in half, or they won’t be able to grow” because it would be paying out virtually all its earnings as dividends, he said.

Rooney suggested that the stunning loss and the stock market’s savage reaction would prompt IBM’s board to “look hard at this management,” though he stopped short of predicting that Akers’ job might be in jeopardy. Academics and others have long said that IBM needs an outsider to shake up its corporate culture.

Despite the turmoil on Wall Street, some investors, who liked IBM’s stock at $80, consider it a steal at $73. “There is a credibility problem, but the yield is higher than a lot of utilities,” said Marvin Roffman, a Philadelphia money manager. “We are very strong buyers of the stock.”

IBM’s third-quarter revenue climbed 1.8% to $14.7 billion, from $14.4 billion for the comparable period in 1991, when net income was $177 million, or 31 cents a share.

Metz, in briefing analysts, disclosed that mainframe computer sales, especially for smaller air-cooled units, have been soft, and that total mainframe revenue will be below that achieved last year. In early August, IBM officials had said mainframe revenue would be flat for the year. Mainframe computers account for the largest chunk of IBM’s sales.

Revenue for mid-range minicomputers was down, by percentage, “in the low double digits,” while PC sales were off “in the double digits,” Metz said.

Asked whether IBM is expecting any relief in the personal computer price war that has shrunk profit margins, Metz replied: “Not so far--I haven’t seen any white flags being waved.”

He said IBM’s biggest shock in the quarter came in Europe, where sales virtually stopped in September as currency values gyrated wildly. “People just stopped buying things,” Metz said. “I must say, we were just plain surprised.”

Metz said he hoped some of the sales lost in the third quarter might be recaptured in the fourth quarter. But he cautioned that “we can’t really say anything (about the fourth quarter) with any level of assurance. It’s a murky world out there.”

IBM’s Turnaround Fizzles

The computer giant’s per share earnings appeared to be back on track in the first half of this year, but third-quarter results announced Thursday were barely break-even, smashing the stock.

Quarterly earnings per share (from operations)

1991 1st: $0.93

1991 2nd: $0.20

1991 3rd: $0.30

1991 4th: -$2.42

1992 1st: $1.04

1992 2nd: $1.25

1992 3rd: $0.15

Weekly share prices, except latest

Thursday close: 72.875