Thursday October 22, 8:14 pm Eastern Time
IBM Chief Gerstner declares era of the PC is over
PALO ALTO, Calif., Oct 22 (Reuters) - Louis Gerstner, chairman and chief executive of International Business Machines Corp., on Thursday declared that the era of the personal computer was over, as the world shifts to a new model of computing.
Gerstner, in his fifth year at the helm of the world's largest computer maker, made the comments in an interview Thursday with cable television network CNBC.
''The era of the PC is over,'' Gerstner said.
In its place will be a new model of so-called network computing. While PCs will still sit on nearly every desk, the programs, data and other information will reside on powerful computer servers linked by networks.
Coupled with the proliferation of the Internet, this new model will allow small companies to function as bigger companies with deeper pockets, and allow large companies to push further into international markets, Gerstner said.
Despite global economic turmoil and ruinous economies in much of Asia, IBM on Tuesday reported third-quarter earnings that rose about 7 percent as robust sales in North America more than offset weakness in Asia.
Per-share gains were helped, as in past quarters, by aggressive share buybacks while overall profits were paced by a 23 percent increase its services business.
Revenue in the services business, which helps customers set up, run and maintain computers and networks, rose to $5.8 billion and grew far faster than the overall services industry.
Net income rose to $1.5 billion, or $1.56 a diluted share, from $1.4 billion, or $1.35 a share, surpassing Wall Street profitforecasts for $1.53 a share.
''Overall, it was a very good quarter,'' Gerstner, 58, told CNBC. Gerstner's first day at Armonk, New York-based IBM was April Fool's Day 1993.
He went to IBM after top-level stints at RJR Nabisco and American Express, and was the first chief executive at IBM not to have come from inside, and up the ranks.
Gerstner, though far from a technologist, brought to IBM a maniacal focus on its customers -- something the executive said IBM lacked.
''We had to focus this company maniacally on the customer,'' Gerstner said. ''We eliminated a lot of the internal focus.'' When Gerstner came to IBM, the company was bleeding red ink, having been caught flat-footed first by the shift to minicomputers from mainframe computers, then by the quick shift to the PC.
IBM has grown to revenues of about $80 billion under Gerstner's stewardship, while its stock price has -- on a split-adjusted basis -- surged more than five-fold to $141.81 little more than $25 a share when he took over.
Earlier this week, the stock touched a record high of $143.69. IBM closed down 81 cents on Thursday at $141.81. Even so, IBM had come under criticism in recent quarters by analysts and investors for revenue growth of 3 percent to 5 percent, excluding the effects of currencies. The concern was that IBM could only continue to cut costs and lower its tax rate for so long before profit growth stalled.
Gerstner also sounded a note of caution for other, large successful companies. Bringing to IBM a change in focus, a change in preoccupation and a re-energizing of its employees, Gerstner said his work and the work of every employee at a large, successful company is never done.
''We're never done,'' Gerstner told CNBC. ''That's my point. You're never done. And when you think you're done, you're in trouble.''
My boss has spoken!
Toy |
