NEW YORK: As IBM sits down to its 79th annual meeting today, analysts agree it is too early to say where new chairman Louis Gerstner is taking the troubled technology giant. ''Gerstner isn't an instant 'magic man','' said Mr Howard Haas, lecturer in business strategy at the University of Chicago Graduate School of Business. ''It would be very presumptuous for him to stand up after only a few weeks in the job and say, 'Here's our new direction'.'' Nevertheless, Mr Gerstner, 51, who was handed a US$5 million signing bonus and options for 500,000 IBM shares on top of a $3.5 million annual salary when he became IBM's seventh chairman on April 1, may get some tough questions from irate investors atthe meeting. IBM shares closed on Friday just below $48 on volume of 2.2 million shares, slightly below average daily volume over the past three months. Long-term IBM investors remember August 1987, when IBM shares traded at nearly $166 and former IBM chairman John Akers could tell them the computer maker's prospects seemed unlimited. But Mr Akers, 58, was ousted in January after IBM posted a 1992 loss of $4.97 billion, the third-largest in US business history. Last Tuesday, IBM reported its third consecutive quarter of losses. The company reported a loss of $285 million, or 50 cents a share, compared with prior-year net income of $642 million, or $1.12 a share. IBM said revenue dropped seven per cent to $13.06 billion. Analysts had expected a bigger loss, but suggested the company wanted to minimise it for public relations reasons. Late Friday, for example, a banking syndicate headed by J.P. Morgan confirmed it was arranging a $4.6 billion loan for IBM and its IBM Credit subsidiary, the first time IBM has tapped international markets in that manner. Buried in IBM's bad news were two optimistic sparks for future growth. Service revenue, mainly from Integrated Systems Solutions Corp, its computer service arm, soared 48.1 per cent to $1.9 billion from $1.29 billion a year ago. And Mr Robert Ripp, IBM treasurer, disclosed that IBM Personal Computer Co, set up only last September as an independent unit, eked out its maiden profit, although he would not say what it was. IBM PC Co, the world's biggest PC maker in the Intel-standard market, had about a 14 per cent share of the global market during the first quarter, said Mr Michael Kwatinetz, PC analyst for Sanford C. Bernstein. Also last week, Lexmark International Inc, IBM's laser printer and typewriter spinoff, announced it was profitable on 1992 revenue that passed $2 billion. On Friday IBM hired former politician Ed Zschau as chairman and chief executive officer of AdStar, its disk drive and computer tape unit that is bigger than any competitor. AdStar, with revenue last year of $6.1 billion, has a mandate to sell more products outside IBM than inside the company, which currently accounts for 80 per cent of sales. Mr Zschau already has his hands full. Two of AdStar's biggest competitors reported quarterly losses, reversing prior-year income. Bloomberg
