IBM fires Akers and slashes dividend
Wednesday 27 January 1993
The move, which accompanied the announcement of a long-expected cut in IBM's dividend, came amid mounting concern about the future of the world's biggest integrated computer company, which last week posted a dollars 5bn ( pounds 3.3bn) annual loss, the largest in corporate history.
Mr Akers, 58, will remain as chief executive for three months while a committee of directors chooses a successor. Two associates, Jack Kuehler, the company's president, and Frank Metz, finance director, were also pushed aside by the board. Paul Rizzo, a rival with Mr Akers for the chief executive's job in 1985, was restored to the post of vice-chairman. Mr Rizzo, 64, who returned to the company late last year after seven years as an academic, also becomes IBM's finance director.
IBM has been scrambling for two years to restructure itself in the wake of huge changes in its industry, notably the fragmentation of the personal computer market and the near-collapse of sales of its core mainframes. Mr Akers had tried to make IBM more competitive, breaking it down into 13 units, sacking almost 100,000 employees and taking dollars 16bn in restructuring charges.
But the company has continued to lose ground, giving up market share and seeing its share price fall almost daily. In the eight years since Mr Akers took the helm, IBM has lost almost three-quarters of its market value, or almost dollars 80bn.
Last week it was overtaken by Microsoft, the maker of operating programs, as the world's most valuable computer company.
Yesterday the company cut its final dividend from dollars 1.21 to 54 cents, reducing the total annual payment to shareholders by 55 per cent to dollars 2.16. The cut came after the company had failed to make enough profit to cover its dividend payments for eight business quarters.
Wall Street, which had been anticipating the dividend cut, although not the sudden management changes, responded favourably, pushing IBM's share price up dollars 1.75 to dollars 40.62.
Mr Akers said he was confident that IBM was on the right path. He said that the company had 'reshaped itself from a vertically integrated computer systems company to a federation of increasingly independent market- responsive businesses.'
But he said it was 'the right time in IBM's business transformation to identify new leadership . . . the changes in the industry and in IBM's business continue to accelerate and new leadership will facilitate our ability to meet those challenges.'
Mr Akers' departure was apparently orchestrated by a number of the firm's outside directors, led by James Burke, a former chief executive of Johnson & Johnson.
Industry analysts suggested a number of potential candidates for the job, all leaders of rival American computer firms. Among those most mentioned are John Sculley of Apple Computer, Eckhard Pfeiffer of Compaq and Scott McNealy of Sun.
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