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To: stak who wrote (67178)	10/24/1998 3:05:00 AM
From: stak	Read Replies (2) \| Respond to of 186894

>>However soon there's going to be a "future shock" in the PC industry. The status quo that was the "law" forever and a day will come to an end. Like hot lead shrapnel violating flesh. The communications industry will go thru even greater pain shortly.<< IBM's Gerstner says PC era over By Reuters Special to CNET News.com October 22, 1998, 7:10 p.m. PT Lou Gerstner, chairman and chief executive of International Business Machines, today declared that the era of the personal computer is ending, 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 his comments in an interview with cable television network CNBC. "The era of the PC is over," he said plainly. In its place will be a new model of so-called network computing, Gerstner predicted. While PCs will still sit on nearly every desk, the programs, data, and other information will reside on powerful 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. Services revenue in fact rose to $5.8 billion, at a far faster pace 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 profit forecasts for $1.53 a share. "Overall, it was a very good quarter," the 58-year-old told CNBC. Gerstner 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. Though far from a technologist, he brought to IBM much-needed focus on its customers--something the executive said IBM had 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--his first day at Armonk, New York-based company was April Fool's Day 1993--Big Blue was bleeding red ink, having been caught flat-footed first by the shift to minicomputers from mainframe computers, and 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 surged (on a split-adjusted basis) more than five-fold to $141.81 from little more than $25 a share when he took over. Earlier this week, the stock touched a record high of $143.69. Even so, IBM has 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 is that IBM can only continue to cut costs and lower its tax rate for so long before profit growth stalls.