I suspect that IBM has two, related problems. Like all companies of its sort it is expected to show significant earnings-per-share growth from quarter to quarter. When it does not its share price suffers, and it feels strong pressure to restore earnings growth.
It has addressed this problem using 1) share buybacks, which reduce the denominator in earnings-per-share calculations, and 2) expense cuts, which in the short term raise the earnings numerator in the same calculations. If the new mainframe models that are shortly to appear raise IBM revenues significantly the climate for significant mainframe-related software investments within the company will probably improve, at least in the short term, as it has in the past. Anything more is not very likely. Very short-term thinking is now the norm in the financial community; and IBM's senior management is aware that it is, among other things, a bouc émissaire available for sacrifice/replacement if that will make important outsiders feel better about the company. (Target's replacement of its CEO, announced in this morning's Times, will propitiate "the analysts" in the short term; but iit does not do much to address Target's real problems.) John Gilmore, Ashland, MA 01721 - USA ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to [email protected] with the message: INFO IBM-MAIN
