<BREAKFAST WITH THE FOOL>
Thursday, March 25, 1999
"Whoever said, 'It's not whether you win or lose that counts,'
probably lost." -- Martina Navratilova
Latest Market Numbers
IBM PC Unit Lost Big in '98
IBM (NYSE: IBM) lost $992 million before taxes in its
personal-computer business last year, the company disclosed in an
SEC filing. That's a significant 516% increase from a loss of $161
million in 1997, and more than 25 times the $39 million it lost in
1996. Still, the company managed to raise its net earnings last year
to $6.31 billion from $6.07 billion, thanks to a 30% rise in
earnings in its services business and a 27% gain in its software
unit.
While some analysts are again calling for IBM to exit the highly
competitive PC business, a company spokesman told The Wall
Street Journal "we remain committed to the PC business,"
including manufacturing and distribution, adding that most of the
losses last year were incurred in the first half, when a glut of PCs
in dealer channels resulted in steep discounting. He stressed that
the PC unit was profitable in the fourth quarter. According to
market-research firm International Data Corp., IBM was fourth in
terms of U.S. PC shipments last year, behind Compaq
Computer (NYSE: CPQ), Dell Computer (Nasdaq: DELL),
and Gateway (NYSE: GTW), and second worldwide behind
Compaq.
Michael Ruettgers, CEO of EMC (NYSE: EMC), which just
signed a deal to buy $3 billion of IBM-made disk drives over five
years, said IBM is moving toward a focus on software, services,
and components. He said it's likely that IBM would eventually
outsource its PC operations to Dell , which recently signed an
agreement to buy some $16 billion in parts from IBM over the
next seven years.
[my bolding--s.] |
