As IBM's woes grew, its accounting tactics got less conservative; firm aggressively recorded shipments as sales, used rare leasing 'insurance;' company defends its moves

Article Abstract:

A growing body of evidence suggests that IBM began using aggressive accounting measures just as its business began turning sour. IBM does not dispute the facts, but disagrees with critics who say that the less-conservative accounting enabled the company to look better, while pushing possible gloomy news into the future. Evidence includes a searing 1988 memo from IBM's top outside auditor, Donald Chandler of Price Waterhouse, that took the company to task for reporting as revenue products that were shipped but might be returned. Chandler has also criticized IBM for making the rare financial maneuver of immediately reporting all the revenue from a long-term computer lease, instead of reporting it over the life of the lease. Chandler, now retired, says that every query he raised was answered satisfactorily. Still, accounting questions could be awkward for IBM, which long had a reputation as the apex of financial conservatism.

Accounting and auditing, Accounting, Public relations

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IBM plans to clone Intel microprocessors in bid to recapture bulk of PC business

Article Abstract:

IBM faces daunting legal problems in its plans to clone Intel Corp microprocessors. IBM has the rights to make Intel-designed microprocessors, but there are severe limits on the quantities it can make. IBM can only sell the chips to other companies if they are packaged in boards or other products. Furthermore, Intel can use any innovations IBM makes in Intel designs. Intel has ferociously defended its chip designs in lawsuits against Cyrix Corp, Advanced Micro Devices Inc and others. Still, Intel's high profit margins on its chips leave room for more competitors, even those with higher production costs than Intel. IBM has also allied itself with Apple and Motorola Inc to design a new family of microprocessors, called the PowerPC, to compete against Intel's chips. Intel stock rises 50 cents to $64.25 while IBM's common stock rose $1.25 to $44.375 on Aug 23, 1993.

Semiconductors and related devices, Computer peripheral equipment, not elsewhere classified, Semiconductor industry, Production management, Microprocessor, CPUs (Central processing units), Intel Corp., IBM, Microprocessors, Intellectual property, Compatibility (Computers), Compatible Hardware, Market Entry, Patent

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IBM's contract with new chairman contains a fairly costly guarantee

Article Abstract:

IBM's contract with its new chairman, Louis V. Gerstner, Jr, guarantees a price of $8.125 for much of Gerstner's RJR Nabisco Holdings Corp stock. RJR's stock closed at $5.625 on May 25, 1993, which means IBM would owe $8.8 million to Gerstner if he collected now. IBM did not reveal this guarantee when the company told its shareholders about Gerstner's compensation agreements, which include a $2 million salary, a $1.5 million bonus option for 500,000 shares and about $5 million in payment for benefits Gerstner gave up when he came to IBM. Industry observer Brian Foley characterizes Gerstner's compensation arrangement as an exceptionally large package that involves less financial risk than had originally been suggested.

Compensation and benefits, Chief executive officers, Wages and salaries, Gerstner, Louis V., Jr., Salary, Wages

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