IBM Expects Weak Sales Due to Y2K-Wary Buyers
International Business Machines Corp. on Thursday reiterated its warning to expect weaker results into the first quarter of next year because of Y2K concerns among customers.
Shares of IBM fell $4.90 to close at $113.38 on the New York Stock Exchange, in what analysts said was disappointment that the company had not signaled a more positive near-term outlook in its meeting with Wall Street.
John Joyce, who was recently elevated to the role of IBM’s chief financial officer, told analysts and major investors at a meeting in New York that many large corporate accounts continue to hold off on new spending ahead of 2000.
Even so, Joyce said, the Armonk, N.Y.-based company would see a return to normal customer buying patterns of its diversified mix of computer hardware, software and technical services in the second quarter of 2000. He added that 2000 could prove to be a banner year.
“What I can say at this point is that our view of earnings per share in the fourth quarter has not changed from the direction that Doug Maine gave you on Oct. 20,” Joyce said, referring to the warning given to analysts by his predecessor.
At that time, Maine had told analysts to expect fourth-quarter earnings 15 cents to 20 cents a share below its year-ago earnings of $1.24--20% below analyst estimates than--and that first-quarter 2000 results also would fall short of expectations.
The news media was barred from attending the Thursday morning meeting between IBM’s top executive team and Wall Street analysts. The company provided access via the Internet to an audio presentation of Joyce’s comments.
The comments were made at the company’s fourth annual briefing for analysts on IBM’s e-business strategy for capturing a major share of corporate spending to Internet-equip their businesses.
Analysts who attended the meeting said the pullback in the stock followed a sharp run-up in recent weeks amid anticipation that IBM would unveil evidence of further progress it was making with its Internet business thrust.
