IBM's chief executive dismissed the company's recent disappointing third-quarter results as a "hiccup" yesterday during a presentation to Wall Street analysts.
The audience was hoping that Lou Gerstner would provide details of how the company intends to improve its business performance in the wake of the mere three per cent increase in sales during its most recent quarter. The revenue figure of $21.8bn was around $1bn less than analysts had predicted.
Although Gerstner's opening remarks paid no heed to investors' reported concerns that they are fed up with IBM's excuses for missing its targets, recently appointed chief operating officer Sam Palmisano admitted that the firm is "disappointed" with the results.
Palmisano isn't the only one - traders and investors have given Big Blue a tough time of late. The company's shares closed at $100 on Wednesday, down $2.125 on the day and well below the stock's highest mark for the year at $134.93.
During the presentation, Palmisano also confirmed that IBM would not be able to deliver its newest mainframe, the Z900, next month as had been previously announced. It is now expected to ship in 2001.
Gerstner used the occasion to offer his opinion on several subjects, stating flatly, for instance, that "there is no new economy". He said that while the internet is a new technology, it is really a "tool to fight the age-old competitive battles", and that his company is a "good plumber" able to build and service the infrastructure of ecommerce.
He also took the opportunity to dismiss the attempts of some large cap technology firms to spin off their supply chains in initial public offerings as "dot alchemy" - a failed attempt, in his opinion, to raise the companies' share prices out of thin air. Gerstner also claimed that the era of the "dotcom, is dot toast".
Both Palmisano and Gerstner projected that the revenue growth Wall Street analysts and investors want to see from IBM will come from the e-services sector. They announced that Big Blue has hired and trained 9000 new employees this year in the services sector, and has retrained an additional 10,000 current employees to operate in the services business.
Trying to bolster their claims that there were better times ahead, both men focused on new service contracts signed with Asian firms, a business once thought the exclusive territory of other Asian suppliers.
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