BM has created two business groups
to consolidate development and marketing efforts. One merges PC and network computer products to focus on end users. The other integrates manufacturing and technology development.
The move came on the heels of an earnings report that exceeded Wall Street's expectations. IBM reported second-quarter earnings of $1.46 per share, better than the $1.42 expected by Wall Street analysts. IBM had net income of $1.4 billion on $18.9 billion in revenue, both up only slightly from the year-ago quarter, when net earnings totaled $1.3 billion on $17.3 billion in revenue.
Services again led the way in revenue growth, with a 24% gain over the same quarter in 1996. IBM added $3 billion in services contracts during the quarter for a total backlog of contracts worth $36 billion. Mainframe sales were strong, but AS/400 and RS/6000 lines posted disappointing sales.
During the quarter, IBM acquired Web developer NetObjects Inc. and obtained full ownership of Advantis, the U.S. network services unit formerly jointly
owned with Sears, Roebuck & Co. Those acquisitions build on the 1995 acquisition of Lotus Development Corp., the centerpiece for IBM's network computing strategy. Although Lotus customers have complained of lack of support, CEO Lou Gerstner says IBM is working hard to change that. "We're pioneering answers to software support-especially in enterprise environments," he told InformationWeek (see related story "
IBM And Lotus Get Closer
").
IBM promoted Sam Palmisano, a 24-year IBM veteran most recently in charge of IBM PC Co., to senior VP for a new unit that incorporates the PC Co., the consumer division, the NC division, and IBM's involvement with Display Technologies Inc., a partnership with Toshiba Corp. for notebook displays. Palmisano also has been named to IBM's corporate executive committee.
Nick Donofrio, the former head of the server group, was named a senior VP in charge of technology and manufacturing, a new position reporting directly to Gerstner.
Palmisano devel
oped a sense for the needs of corporate customers while heading IBM's services group and brought that understanding to the PC Co., where he shifted the marketing emphasis from price to the enterprise value of the PC, says Frank Dzubeck, president of Communications Network Architects Inc., an industry consulting firm in Washington.
In an internal IBM memo, Gerstner said Palmisano's group will be responsible for an integrated viewpoint across product lines focused on customers, a position that has become necessary "because the distinctions between the personal computer and network computer, consumer and commercial client products, are blurring from a technology point of view, a marketing point of view, and, most important, a competitive point of view."
Back to News in Review
Send Us Y
our Feedback
Top of the Page
BM has created two business groups
to consolidate development and marketing efforts. One merges PC and network computer products to focus on end users. The other integrates manufacturing and technology development.
