IBM posts $8.04 billion 2nd-period loss, halves dividend, plans 35,000 job cuts

Article Abstract:

IBM Chmn Louis V. Gerstner Jr. announces that the firm is taking a pretax charge of $8.9 billion, $6 billion of which will go for cutting 35,000 jobs worldwide and $2.9 billion of which will go for shuttering factories and office space. The charge gives IBM a 2nd qtr 1993 loss of $8.04 billion, or $14.10 per share. The operating loss of $40 million, or eight cents per share, was less than had been expected. IBM is also cutting its quarterly dividend for the second time in 1993, from 54 cents to 25 cents. Describing the past seven years of intermittent cuts as 'Chinese water torture,' Gerstner says that he hopes no more will be needed. Since 1985, IBM has taken $28 billion in charges as it has slashed its work force by 180,000 jobs. IBM's stock rises $3.25 to $46.625 on Jul 27, 1993, after Gerstner makes the announcement. Gerstner's biggest challenge is to select which high-tech markets IBM should focus on in its bid to regain financial health.

Management, Gerstner, Louis V., Jr., Cost control, Cost Reduction, Work Force Reduction

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IBM net soared in 2nd quarter; stock tumbles; further strides were made in reducing some costs, but challenges remain

Article Abstract:

IBM posts a profit of $714 million, $1.25 a share, for 2nd qtr 1992 but its stock value declines following the release of the financial report. Industry analysts believe the fall in stock prices was because earnings, though profitable, fell short of projections by some investors. Although the financial report was sound, analysts believe that investors should approach IBM with caution as the company must demonstrate continued profitability in the light of a microcomputer price war and uncertainty in the mainframe computer market. Strategies for 3rd qtr 1992 include the likely introduction of a low-end microcomputer line, as well as further price cuts on other microcomputer products. While the mainframe market remains uncertain, IBM has been enjoying a healthy income from its mainframe products. Company officials expect modest growth to continue for the balance of the year.

IBM, Profits, Forecasting, Revenue, Profit, Stock, Financial Report, Second Quarter

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