Y2K Slows IBM In Fourth Quarter
IBM says Y2K isn't over. The computing and services giantsaid Wednesday that customer concerns about the millennium
bug are to blame for a fourth quarter in which its profit
fell 11% compared with the previous year. "Many of our large
customers, who handle much of the world's critical data, had
locked down their computer systems as they prepared for the
Y2K transition," IBM chairman and CEO Louis Gerstner said in
an earnings statement issued by the company late Wednesday
afternoon.
IBM's net income for the quarter also dropped--to $2.1
billion from $2.3 billion in the same period a year ago.
That translates to per-share earnings of $1.12, topping
First Call estimates of $1.06 per share. IBM's fourth-
quarter revenues came in at $24.2 billion, a 4% decline from
a year ago.
During its earnings call, Gerstner also warned that the
company expects Y2K-related slowdowns to impact its
performance in the current period. "We are still feeling the
lingering effects of Y2K in the first quarter," Gerstner
said. Analysts say they are not surprised. "A lot of users
were expecting to be dealing with Y2K problems right now,"
says Giga Information Group's Rob Enderle. "For the most
part that didn't materialize, but the lag is there all the
same."
Still, IBM's tepid year-end performance did not prevent it
from posting a record net income of $7.7 billion for 1999
overall, compared with $6.3 billion the previous year. IBM's
total revenues also increased in 1999--up 7% to $87.5
billion. The figure includes an after-tax benefit of $750
million, derived mostly from the sale of the company's
Global Network to AT&T.
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