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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: rupert1 who wrote (61232)	5/13/1999 3:10:00 AM
From: rupert1	Read Replies (2) \| Respond to of 97611

IBM has a dig at COMPAQ. Gerstner also took a few gentle swipes at IBM's competitors. He made a thinly-veiled reference to Compaq Computer Corp. (CPQ) and Hewlett-Packard Co. (HWP), both of which are looking for new chief executives, calling them "rogue elephants" that keep bumping into each other. May 12, 1999 --------------------- IBM CEO: Internet Is 'Gigantic Services Opportunity' Dow Jones Newswires By Christopher Grimes NEW YORK -- International Business Machines Corp. (IBM) Chief Executive Louis V. Gerstner Jr. explicity told Wall Street Wednesday that Big Blue is not neccessarily an Internet company. But the message implicit in his annual address to financial analysts was that IBM is as much an Internet company as any youthful Web start-up. He said he was confident that about $20 billion, or 25%, of IBM's revenue in 1998 came from e-business. And he said IBM is more commonly associated with Internet-based business than any of its rivals. "I'm not suggesting you view us as an Internet company, but I think it's worth noting that IBM is generating more revenue and profit than all the top Internet companies combined," Gerstner said in his upbeat remarks. IBM's Gerstner made his remarks to analysts after the market closed in New York. IBM shares rose 4 1/2 to 225 1/2, a new all-time high, before the meeting started. The meeting was officially closed to reporters. Gerstner has built the IBM's computer services business from scratch in his six-year tenure, with services now generating most of the company's revenue growth. In the first quarter, sales IBM's services division rose 19% from a year earlier to $7.6 billion. IBM said the Internet is "a gigantic services opportunity," since companies need help planning and installing their Internet operations. He estimated that 60% of the total that companies will spend to become Internet-ready will go toward services, not hardware or software. "As the world's largest services company, we're right in the sweet spot" of the market, he said. Still, Gerstner devoted much of his 90 minutes on stage to IBM's hardware business. He said the Internet is also driving demand for large computer servers, one of the company's historic strengths. And he also defended IBM's PC business, which lost close to $1 billion in 1998, leading to some speculation that the company could get out of the market. But he said he feels "pretty good about the PC (business) right now. "It's important for us to be in the PC business," he said. "We ought to be able to make some money in this business ... we'll be in the PC business for a while." Gerstner garnered a lot of attention with his statement in IBM's annual report that "the PC era is over." Expanding on that, he said the PC is no longer the center of innovation in technology. Rather, it is now the "network" that is the basis for the Internet. He said that eventually, a lot of non-PC devices will also connect to the Web, but not neccessarily to the exclusion of personal computers. And he said IBM isn't interested in building Internet-ready devices. "We are not going to build Dick Tracy wristwatches or Internet-enabled eyeglasses," he said. IBM's Gerstner said the company's revenue growth, which has been stuck in the single-digits, is picking up and will eventually reach the double digits. "Our revenue growth is moving up significantly," he said. In the first quarter, IBM's revenue rose 15% to $20.3 billion, compared with a year earlier. Gerstner also took a few gentle swipes at IBM's competitors. He made a thinly-veiled reference to Compaq Computer Corp. (CPQ) and Hewlett-Packard Co. (HWP), both of which are looking for new chief executives, calling them "rogue elephants" that keep bumping into each other. "The sooner they get some leadership the better it's going to be for all of us," he said. And he derided moves by some of IBM's competitors to become more diversified, saying the companies are "racing feebly to be like us." He mentioned Compaq's 1998 purchase of Digital Equipment Corp. and Microsoft Corp.'s (MSFT) various partnerships in a litany of examples of companies trying to emulate IBM. Gerstner reiterated his belief that IBM's chief growth opportunities are in services, software and the so-called OEM business, which means selling hardware components to other technology companies. He said the company is shifting its money-losing DRAM chip production to logic chips, and that he could envision a day within five years when the company no longer makes DRAM chips. Gerstner also said that the company has had "zero" success in predicting the way the year 2000 bug is impacting corporate spending. He said IBM hasn't been impacted negatively at all from year 2000 issues, and that if there is a big cutback in spending, it won't last long. After Jan. 1, he said, companies will scramble to shift their spending to e-commerce. He predicted IBM would see "huge demand in services and e-business in 2000." -Christopher Grimes; 201-938-5253