IBM Shuffles Management in an Effort to Reverse Slide : Corporate: Computer maker announces senior executive from printer unit will replace outgoing PC division president.
IBM’s personal computer division, after losing much of its 1993 momentum during the first quarter, announced broad leadership and structural changes Monday, including the retirement of top executive Robert Corrigan.
The division known as the IBM PC Co. is the world’s largest maker of PCs and grew remarkably last year after reshaping itself in the summer of 1992. But high costs and some vexing product problems have recently hurt it.
No one will fill Corrigan’s title as president of the IBM PC Co. His duties will be assumed by G. Richard Thoman, hired as IBM senior vice president five months ago to oversee the PC Co., the IBM printer unit and an emerging subsidiary that will make PCs based on a new computer chip IBM co-designed.
The PC Co. also changed the duties of top executives, realigning several operations and wiping away geographic divisions.
“In our business, the key factors are quality and cost and speed,” Thoman said. “What we’re designing to do with this organization is maintain the quality lead we already have and enhance our cost and speed.”
Corrigan, who will retire June 30, was unavailable for comment.
Corrigan, 53, had earlier indicated to Thoman and IBM Chairman Louis V. Gerstner Jr. that he would probably leave this year. Some analysts said his decision to step down now is a sign the autonomy given the IBM PC Co. in 1992 was evaporating.
“It seems they’re going to be making more decisions at the headquarters instead of the unit,” said Jeff Henning, analyst at BIS Strategic Decisions in Norwell, Mass. “I don’t think that’s in their best interest.”
Thoman, however, said the changes had been planned with Corrigan.
Corrigan leaves the company as it struggles with several products. He visited Japan last month to try to correct a well-publicized shortage in screens for ThinkPad laptop computers.
New models in IBM’s core PS-2 desktop line for businesses have been postponed since winter because of a technical problem. An excess supply of ValuePoint models has forced price cuts to that line.
After sales grew nearly 40% in 1993, the PC Co.’s growth screeched to just 6% in the first quarter, according to a preliminary estimate by International Data Corp., a market researcher in Framingham, Mass. The industry grew an average 11% in the period.
Even more damaging to IBM’s psyche is that its PC sales slipped behind Compaq Computer Corp. and Apple Computer Inc. during the quarter. Compaq sold 970,000 PCs compared to Apple’s 845,000 and IBM’s 840,000, according to IDC.
“I don’t think they’ve ever been third in any quarter,” said IDC analyst Richard Zwetchkenbaum. “Compaq has become something they’re fixating on and rightly so.”
IBM does not report the profitability of its units. But analyst estimates of the PC Co.’s profit margin range from the single digits to around 18%. That’s better than losing money but not enough to satisfy Wall Street.
