The idea that DELL will manufacture IBM machines is gaining steam. Get onboard now.
Fez
_________________________
Analyst: IBM's PC Business Lost $1 Billion
(03/24/99, 8:17 p.m. ET)
By Edward F. Moltzen, Computer Reseller News
IBM's PC business lost almost $1 billion last year, despite cutting more than $1 billion out of its cost structure over a two-year period, a Wall Street analyst said after reviewing IBM's annual report.
Merrill Lynch's Steven Milunovich, in a report, suggested IBM dump its PC operations altogether and have the likes of Dell Computer or Intel manufacture IBM PCs for the Armonk, N.Y.-based vendor.
The computer giant, which has steadfastly refused to detail its profit and loss statements by division, must now do so to comply with the U.S. Securities and Exchange Commission.
"The loss in PCs was a key reason hardware only contributed 29 percent of [IBM] pretax profit," Milunovich said. "Although 'real' PC loss likely was less than the $992 million reported when allocated expenses are rejiggered, the fact that IBM did not earn cost of capital the past three years is quite damning," he said.
Overall, IBM as a company saw more than $81 billion in revenue for 1998 and a profit of more than $6 billion. While they had reported the more general results earlier, Milunovich was among the first to offer an analysis of the in-depth report.
IBM's profit for 1999 would be 50 cents to 75 cents per share higher without PCs, said Milunovich.
"At least the assets committed to the PC business have declined from $2.7 billion in 1996 to $1.5 billion in 1998 and capital-spending needs are small," Milunovich said in the report.
|
