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In the early 1990s, International Business Machines Corp. (IBM Corp.) was in a devastating slump. Stock prices had dropped from $43 in 1987 to $12 in 1992. System/390 mainframe sales were at an all time low. IBM Europe, Middle East and Africa (EMEA) reported a dismal gross profit margin of 38% in 1992, down from 56% in 1990. In both print and TV, chroniclers heralded the eventual demise of this industry giant. Charles Morris and Charles Ferguson co-authored a book titled Computer Wars. In it was a statement allegedly quoting Bill Gates as saying that IBM ³will fold in seven years.´ The Wall Street Journal said, ³IBM will never again hold sway over the computer industry. Then came Louis V. Gerstner, Jr. and IBM was never the same again.
IBM¶s troubles pre-date the internet age; but the situation the company found itself in back in the early µ90s has a number of spooky similarities with those that many media and entertainment companies have faced in recent years. By any rational analysis, IBM was on its knees. The company was full of smart people earning more patents than any other company in the United States, but as PCs started to spread through the corporate world, and IBM¶s mainframes were undercut by cheaper competitors, the business was going backwards. When the company declared an $5 billion loss ± then the biggest loss in U.S. corporate history ± it was clear that radical change was needed. And the board turned to Lou Gerstner, who had been running RJR Nabisco, and before that had been a senior executive at American Express. What he achieved was little short of a miracle ± and it remains the blueprint for turning around a business that finds itself on the wrong side of disruptive innovation. After all, if you can fix a bloated bureaucratic behemoth that has 500,000 employees, then there has to be hope for the rest of us.
In 1910 Charles Ranlett Flint started the earliest ancestor of IBM under the name Calculating-Tabulating-Recording, or CTR, by merging three firms: International Time Recording Co., Computing Scale Co. of America, and Tabulating Machine Co. The last was founded by an engineer, Herman Hollerith, who had invented a tabulating machine²an apparatus that sorted and counted punch cards. This machine was first sold to the U.S. Census Bureau, and later to businesses that needed to organize large amounts of data economically. In 1915 Thomas Watson was hired as CTR's general manager and, by 1920, had built CTR into the leader in tabulating design. CTR changed its name to International Business Machines²or IBM²in 1924. By focusing on large, custom systems for businesses, the company found that it had fewer competitors than those that made smaller, massproduced systems. The company leased its products, instead of selling them, and reported profits throughout the 1920s. Initially, IBM held onto its market and customers by making punch cards that only worked with its own machines. By 1932, this policy had led to a U.S. government antitrust suit filed against IBM. At the time, IBM controlled 85 percent of the U.S. market for tabulating, keypunch, and accounting equipment. The New Deal programs of the Depression years expanded government bureaucracy, which led to a need for large calculators; IBM supplied this equipment. World War II bolstered IBM's sales as well, and increased public and private-sector demand for tabulators helping to triple IBM's sales.
In 1970 IBM introduced the first "floppy" (5 1/4 inch) disks, which were made by forming thin wafers of silicon and then cutting them into chips, thus setting the stage for much smaller systems. IBM subsequently released a new system, the 370 family. It was faster and could do more simultaneous tasks than prior systems. In 1973, IBM doubled the storage space on floppy disks with the 3340 disk storage unit, which functioned like main memory but at a much lower cost. In 1975 IBM attempted to release its first personal computer, the 5100, weighing 50 pounds and costing about $5,000. Sales were disappointing. Realizing that demand for personal computers was minimal at the time, IBM focused on building mainframes. It was not until 1980 that IBM tried again to crack the personal computer market. By then, many other companies were already making the machines, and IBM was not able to gain immediate control of the market. That same year, it rolled out the IBM 3687 Holographic Scanner, which was used with the IBM 3683 supermarket terminal to read bar codes. Throughout the 1990s, IBM continued to grow by producing many new systems and personal computers, and by providing various consulting services. It expanded its overseas operations and, in the late 1990s, continued to dominate the mainframe and computerrelated service markets.
IBM makes leading computer hardware and software, and provides consulting services through its IBM Global Services unit. Hardware products include mainframes, servers, midrange, and desktop machines. Recent introductions include the ThinkPad 560, which weighs only 4.1 pounds and has one of the sharpest and largest screens in its class, and the enlarged Aptiva line of personal computers, which allows the monitor and media drives to be placed on the desktop, with the tower located elsewhere. The IBM Network Station allows businesses to access the Internet on a large scale. IBM's 1996 investment of $4.7 billion in research and development toward embedded microelectronics for digital devices²a method for bringing clear video to desktop computers²yielded the Voice Type Simply Speaking software, which allows the user access to applications by way of voice control. Lotus Notes, dubbed in the 1996 annual report "a human transaction system," allows team members across an organization to integrate their collective work more efficiently. IBM Global Services, a $19billion business that experienced double-digit growth for more than 20 straight quarters in the mid- and late 1990s, assists customers with installation and implementation of their IBM machinery. In 1998, IBM's Internet service had about 750,000 subscribers.
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Key dates for ibm
Charles Ranlett Flint starts the Calculating-Tabulating-Recording (CTR) firm CTR changes its name to International Business Machines or IBM A U.S. Government antitrust suit is filed against IBM IBM introduces its 705 general-purpose business computer The company releases the Stretch computer system The company introduces the first "floppy" disk IBM releases its first personal computer The 3687 Holographic scanner is released IBM researchers move individual atoms The Think Pad is introduced Deep Blue, an IBM Supercomputer, defeats the World Chess Champion IBM announces its "E-business Tools" line
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IBM is the world's largest computer company, with annual sales rapidly approaching 12 figures, about 60 percent of which comes from outside of the United States. In addition to manufacturing hardware and software, IBM has diversified into the areas of Internet service and computer consulting²in 1997 alone, 15,000 new employees joined IBM's services arms. The early 1990s were a time of crisis at IBM, but after a major revamping that began in 1993 and included some downsizing and a reevaluation of the company's strong points and mission, IBM managed to get back into the driver's seat and into the fast lane.
Bold letters on IBM's rich web site declare, "IBM is about TWO things: 1. Creating the industry's most advanced information technologies; 2. Helping customers apply that technology to improve what they do²and how they do it." Keen insight into the issues facing today's industries allows. IBM to design products that deliver maximum impact and long-lasting value. In a December 1997 interview in U.S. News and World Report, CEO Gerstner explained IBM's developing view of itself as a provider of solutions to the customer's needs, "Our ability to integrate is a unique advantage of this company. So we said: All right, now let's go build a strategy around integrating the technology into solutions for customers. That was the fundamental decision we made." Aside from the company's strategy as a vendor, Gerstner writes in his annual statement that IBM is "committed to maximizing shareholder value and to making productive use of our cash." Since 1995 IBM has made 45 strategic acquisitions. Its acquisition of Lotus Development Corp., the maker of the popular Lotus Notes messaging software, was significant and highly publicized; but each of the other corporate deals has been just as calculated to contribute to IBM's long-term success, as have been the decisions to decline certain takeover opportunities.
One current, emerging growth area for IBM is "deep computing," which links high-speed computers and analytical software. A major customer for this technology is the U.S. Department of Energy, for whom IBM is building a supercomputer for use in nuclear-weapons simulation testing. IBM envisions the technology as being useful to the pharmaceutical industry in simulating chemical reactions, and to the business world in providing financial modeling. In the mid-1990s, two celebrated face-offs pitted Russian chess grandmaster Gary Kasparov against "Deep Blue," an IBM RS/6000 SP supercomputer that utilizes deep computing technology. NASA's 1997 Pathfinder mission to Mars included an IBM RS/6000 as its onboard flight computer. Also in space that year were several IBM ThinkPad laptop computers missions.
A. Premier; leading; preeminent; world-class; growing B. Innovative; cost-efficient; focused; diversified; high quality C. Products; services; products and services D. To serve the global marketplace; create shareholder value; fulfill our covenants with shareholders; delight our customers E. In a rapidly changing Information-solutions; business-solutions; consumersolutions; financial solutions industry. A. Premier; leading; preeminent; world-class; growing B. Innovative; cost-efficient; focused; diversified; high quality C. Products; services; products and services To serve the global marketplace; create shareholder value; fulfill our covenants with shareholders; delight our customers
From a financial standpoint, 1997 was a record year for IBM, and a crucial one for nurturing the company's improving health. Revenues for 1997 reached $78.5 billion, with $19.3 billion representing the company's services businesses. Net earnings were $6.1 billion, up from $5.9 billion in 1996. After the effects of foreign currency fluctuation, earnings improved by 8 percent. During the year, the company invested $5.5 billion in research and development, $300 million more than in 1996, and laid plans for a $700-million microchip development facility that will utilize the newly patented copper technology. Stockholders' equity in 1997 measured almost $20 billion, and earnings per share were $6.18, up from 1996 earning of $5.53. Since 1996, the quarterly dividend has increased by 76 percent. In April 1997 directors raised the amount by 14 percent and, in April 1998 they increased it by another 10 percent, along with approval to step up the stock-buyback plan by $3.5 billion. Between 1995 and 1998, the company bought back about $20-billion worth of its common stock. At the close of 1997, there were 623,537 holders of common stock, which split twofor-one in the second quarter. IBM's market valuation, which CEO Louis Gerstner called "the ultimate measure of our performance," grew by $23 billion. The company ended 1997 with $7.6 billion in cash
International Business Machines Corporation (IBM), is an information technology (IT) company. The Company operates under five segments: Global Technology Services segment (GTS); Global Business Services segment (GBS); Software segment; System and Technology segment, and Global Financing segment. In October 2009, IBM Corporation completed its acquisition of SPSS Inc. In November 2009, IBM acquired Guardium. In January 2010, announced the completion of its acquisition of Lombardi. In February 2010, the Company acquired Intelliden Inc. In March 2010, the Company completed the acquisition of National Interest Security Company, LLC. In April 2010, the Company acquired Cast Iron Systems, which delivers cloud integration software, appliances and services. In July 2010, it acquired BigFix, Inc. In August 2010, the Company acquired Datacap Inc. In October 2010, the Company acquired Unica Corporation.
Stock activity $ fundamental data
Last Price138.03 52 Week High143.03 52 Week Low116.00 Volume14.16 Mil Average Daily Volume (13wk)5.83 Mil 50 Day Moving Average131.31 200 Day Moving Average128.69 Volatility (beta)0.74 Detailed quote Financial data in U.S. dollars Debt/Equity Ratio1.23 Gross Margin45.70% Net Profit Margin14.67% Total Shares Outstanding1.2 Bil Market Capitalization171.16 Bil Earnings/Share10.99 StockScouter Rating 9
In 1990, IBM had its most profitable year ever. By 1993, the computer industry had changed so rapidly the company was on its way to losing $16 billion and IBM was on a watch list for extinction -- victimized by its own lumbering size, an insular corporate culture, and the PC era IBM had itself helped invent. Then Lou Gerstner was brought in to run IBM. Almost everyone watching the rapid demise of this American icon presumed Gerstner had joined IBM to preside over its continued dissolution into a confederation of autonomous business units. This strategy, well underway when he arrived, would have effectively eliminated the corporation that had invented many of the industry's most important technologies. Instead, Gerstner took hold of the company and demanded the managers work together to re-establish IBM's mission as a customer-focused provider of computing solutions. Moving ahead of his critics, Gerstner made the hold decision to keep the company together, slash prices on his core product to keep the company competitive, and almost defiantly announced, "The last thing IBM needs right now is a vision."
Shares of IBM took a hit in premarket trading Tuesday after its thirdquarter results showed a decline in the company's outsourcing business. Shares of International Business Machines Corp., which like Apple Inc. have been trading at record highs recently, slid $4.93, or 3.5 percent, to $137.90 in premarket trading. IBM's overall results came in above Wall Street's expectations, and the company raised its outlook slightly for the rest of the year, as it has done in the past. But the value of the company's technology services contracts fell 7 percent to $11 billion, hurt by a shortfall in outsourcing deals. IBM said the shortfall was due to one large outsourcing contract, which it signed a week into the fourth quarter instead of in the third. Janney Capital Markets analyst Joseph D. Foresi seemed reassured about the results' implications for other technology outsourcing providers.
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