Gerstner: IBM ready to roar back from Y2K

With the frank admission that IBM's business screeched to a halt late last year because of customers' Y2K-related purchasing delays, Chairman and CEO Louis V. Gerstner promised on Wedneday that his company is ready to roar back this year with a concentration on e-business.

In his annual address to securities analysts in New York, Gerstner acknowledged that IBM was late with its 10,000-rpm hard-disk drive and that the company has seen a decline in its PC business, though the latter development was expected.

However, Y2k proved to be the biggest blow to IBM over the past two quarters.

"We should have seen it," said Gerstner, whose remarks were posted on IBM's Web site on Wednesday. "We predicted it, everybody predicted it, but nobody expected it to be so concentrated."

He touted e-business as the engine that would fuel future growth for the company.

"E-business is shifting the workload from PCs into the computing and communications infrastructure," he said. "The demands and requirements already being placed on the infrastructure are enormous, and they're only beginning. They will increase exponentially."

He continued by stating that IBM's e-business infrastructure will be open, not proprietary, and that "generic" Web servers won't be able to handle the information load or complexity of such an infrastructure.

"In the world of e-business, more than anything else, the integration process is moving to an area called middleware," Gerstner said. "The once prosaic, unpopular middleware layer of software - databases, messaging, groupware, transactions and systems management - for all intents and purposes is the layer software developers are writing today. Not the machine-level code, not the operating system, it's middleware."

Gary Helmig, a market analyst who covers IBM for Soundview Financial Group, rated Gerstner's delivery high, but his content low.

"There wasn't much news there," Helmig said, pointing to Gerstner's comments about IBM's sluggish PC growth as an example.

"We all knew that, but it wasn't clear that he would sell rather than be able to fix it," Helmig said.

Helmig praised IBM's e-business growth as "a legitimate nail to pound on" and said IBM should experience double-digit revenue growth for the coming year.

"IBM needs something new to get the revenue, the top line, growing," he said. "That's what I wanted to hear about, and there wasn't a lot of that."

Join the newsletter!

Error: Please check your email address.

More about IBM AustraliaTop Line

Show Comments

Market Place