IBM makes surprise dollars 336m profit

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The Independent Online
NEW YORK - International Business Machines turned in an unexpectedly strong first quarter, reversing the loss it suffered the year before amid a change in its senior management, writes Larry Black.

IBM made dollars 336m ( pounds 224m), or 54 cents a share excluding two one-off charges, following a loss of dollars 285m ( pounds 197m) or 50 cents a share during the first three months of 1993. Despite deep cuts in employment and other expenses - which fell a total of 23 per cent from last year - IBM saw revenues rise 2 per cent to dollars 13.4bn, with growth in all important regions where it operates, including Europe.

The market, which pushed IBM's share price up almost dollars 5 to dollars 571 8 yesterday, was particularly impressed by a 9 per cent increase in hardware sales, notably of its AS/400 minicomputers, its new RISC System/6000 and its PCs. Sales of mainframes - once IBM's core business - continued to slide, although it said there was some evidence that the decline was levelling off.

Louis Gerstner, who was named to replace John Akers as IBM's chief executive a year ago, said the results were encouraging.

But 'results from one quarter do not guarantee sustained, long- term success,' Mr Gerstner said.

'We've improved in many areas but we still have a long way to go.'