LVG's Analyst's speech today was "4 Q" bullish but not specific
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" IBM CEO Says 'PC Is Dead'
(11/08/00, 8:26 p.m. ET) By Antone Gonsalves, TechWeb Finance
Louis Gerstner, IBM Corp. chairman and chief executive, said Wednesday that the
company's revenue troubles in 2000 were reflective of its transforming into an e-business
within an IT industry undergoing upheaval by the death of the PC.
"I think the big question in the industry today is what's going to happen to this PC
replacement cycle," Gerstner told analysts during the company's Fall Security Analysts's
Meeting. "We know that the locus of investment in this industry has moved off the PC.
"I've said it for two years. The PC is dead," he added. "It's not where people think, it's not
where they act, it's not where the applications are built, and it's not where the investment is
going."
Gerstner said the questions that high-tech companies are struggling with are how will the
industry change and which segments will grow in the next several years.
"I don't want you guys to take away from this meeting that everything is rosy," Gerstner said.
"We're always going to have pieces of our business that are really moving up rapidly, and
others that are going through transformations."
Nevertheless, Gerstner said he expects IBM (stock: IBM) to sustain "high single-digit
revenue growth," which is slightly below the industry grow rate of 10 percent.
"At some point we may cross over and grow faster than the industry," Gerstner said. "But
we're not going to do that by reaching for revenue at the expense of either fundamental
market positioning and making sure that we drive substantial cash to reinvest in the business."
Gerstner said he was unhappy with IBM's lackluster revenue growth of only 3 percent in the
third quarter, but said, "It's six weeks from the end of the year, and in my opinion it has been
a good year."
Gerstner, who was joined at the meeting with several IBM executives, declined to talk about
the fourth quarter, which was declared off limits by Chief Financial Officer John Joyce at the
beginning of the meeting.
In becoming and e-business, IBM has had to introduce new lines of software, services and
hardware to meet the needs of companies looking to leverage the Internet in all facets of
their business.
Because IBM started the transition seven years ago, it was in better position than many other
companies today, Gerstner said.
Although he mentioned no companies by name, his
comments appeared to point to Microsoft Corp. (stock: MSFT), AT&T Corp. (stock: T)
and Compaq Computer Corp. (stock: CPQ).
"What I think you ought to be most comfortable with is we have made the transition from the
old business to a mix of the old business and the new business," Gerstner said. "As I look
around the IT industry, I am staggered by the companies I see that are entering that process
that we entered in 1993."
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In the past IBM is weak for a few days after the meeting.
Hopefully some accumulation will occur.
Jim K. |
