IBM set for dollars 4.5bn loss

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The Independent Online
IBM, the world's largest computer company, is expected to announce this week a loss of around dollars 4.5bn ( pounds 3bn) for 1992 - one of the largest in corporate history, writes Mary Fagan.

Speculation is mounting that John Akers, its chairman, will be forced to give up his post before he reaches retirement age in 1995.

'Big Blue' has been severely hit by recession in its mainframe business, and faces fierce competition from other personal computer manufacturers.

In 1991 the company made its first-ever loss, of dollars 2.8bn. During 1992 it shed 40,000 jobs, reducing the workforce to 305,000. In December, IBM announced that 25,000 more would go.

An announcement of the loss for 1992, which will include a dollars 6bn restructuring charge taken in the fourth quarter of the year, is expected on Tuesday,

Critics of IBM say it has failed repeatedly to respond to changes in the market, including the trend towards smaller systems and computers which work with equipment from other manufacturers - so-called open systems.

Mr Akers, who took over as chairman in 1985, has tried to turn the business around. Recently he divided it into 13 separate companies, with each one supposed to operate autonomously. The changes include buying components and services from non-IBM suppliers where appropriate, even if the products are available from another IBM unit.

There have been rumours that IBM would be prepared to float some of these companies on the stock market, or sell them. Some analysts believe IBM's future would be more secure if it was broken up.

In the personal computer market which IBM effectively spawned, market share has been eroded by many smaller rivals. The bitter PC price wars have shaved margins to the limit.

On Tuesday, IBM will say that services, software and open systems have experienced the strongest growth. However, these sectors are already crowded with competitors who were quicker to realise their worth.

The UK, where IBM has two manufacturing sites, is not immune to the company's problems. In 1991 IBM made a loss of pounds 124m in Britain after a restructuring charge of pounds 184m. The UK workforce has since shrunk by 1,000 to 14,000.

(Photograph omitted)

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