IBM: Behind the Monolith

Or, in Other Words...

Wall Street Journal.

Apr 7, 1986

The U.S. State Department had 16,527 employees overseas, including foreign nationals, at the end of 1985. IBM had 163,294.

Source: U.S. State Department


IBM spent an average $2,278 per employee educating its workforce in 1984 -- more than Alabama, Mississippi or Utah spent, per student.

Source: National Education Association


At the end of last year IBM's market capitalization stood at $95.7 billion. That's more than the total stock market capitalization in Switzerland ($90.3 billion), France ($78.5 billion) or Italy ($64.7 billion).

Source: Morgan Stanley Capital Intl.


In 1984 IBM contributed $145 million to charity. The largest U.S. private charity, the Ford Foundation, contributed $122.1 million.

Source: Foundation Center


IBM's 1985 revenue of more than $50 billion is larger than the most recently reported gross domestic product of Greece, Iceland, Ireland, Luxumbourg, New Zealand, Portugal or Turkey.

Source: OECD


IBM's world-wide tax provision in 1984 was $5.04 billion. It would take 1.2 million Americans, paying average taxes, to equal those revenues.

Source: Tax Foundation


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IBM: Behind the Monolith

IBM by the Numbers: Comparison With Five Major U.S. Companies

Wall Street Journal

Apr 7, 1986

    Sales (In billions of dollars, 1985)
     IBM      GM     AT&T    Du Pont  GE   U.S. Steel 
    $50.1    96.4    34.9    29.5    28.3    19.3
    Earnings (In billions of dollars, 1985)
     IBM      GM      GE     AT&T  Du Pont U.S. Steel 
    $ 6.6     3.9     2.3     1.6     1.1     0.41
    R&D Expenditures (In billions of dollars, 1985)
     IBM      GM      GE     AT&T  Du Pont U.S. Steel 
    $ 4.7     3.6     2.6     2.2     1.1     0.54
    Return on Assets (In percent, as of March 27, 1986)
     IBM      GE      GM     Du Pont AT&T  U.S. Steel 
     12.5%    9.4     6.3     4.4     3.8     1.6
    Return on Common Equity (In percent, as of March 27, 
     IBM      GE      GM     AT&T  Du Pont U.S. Steel 
     20.5%   18.1    13.7    10.6     9.0     8.5
    Profit Margin (In percent, as of March 27, 1986)
     IBM      GE     AT&T     GM   Du Pont U.S. Steel 
     13.1%    8.3     4.5     4.1     3.8     1.6
    Employees (1985)
     IBM      GM      AT&T    GE     Du Pont U.S. Steel 
     405,536 811,000 337,000 304,000 145,007  79,649
    R&D Expenditures Per Employee
     IBM      GE    Du Pont  AT&T    GM    U.S. Steel 
    $11,590  8,398  7,835   6,545   4,470     678
    Earnings Per Employee
     IBM      GE    Du Pont U.S.Steel  GM    AT&T 
    $16,164  7,684  7,667   5,135   4,789   4,612
    Large Systems (More than $350,000)
    IBM                       62.6% 
    Burroughs                  6.5 
    Sperry                     6.1 
    Digital Equipment          2.8 
    Fujitsu                    2.8 
    Hitachi                    2.6 
    Control Data               2.6 
    Amdahl                     2.5 
    Other                     11.5
    Small Systems ($12,000-$349,999)
    IBM                       20.0% 
    Digital Equipment         12.7 
    Nixdorf                    6.0 
    Hewlett-Packard            5.8 
    Wang                       4.3 
    NEC                        3.1 
    Burroughs                  2.8 
    NCR                        2.7 
    AT&T                       2.4 
    Tandem                     2.2 
    Fujitsu                    2.0 
    Other                     36.1
    Microsystems (Less than $12,000)
    IBM                       27.7% 
    Apple                      9.0 
    Commodore                  4.2 
    Hewlett-Packard            4.2 
    NEC                        3.6 
    AT&T                       3.5 
    Tandy                      3.1 
    Wang                       2.7 
    Other                     42.0
    Sources: Infocorp; Media General

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IBM: Behind the Monolith

Milestones: From Hollerith's Cards to PCs

Wall Street Journal

Apr 7, 1986

1884 -- Herman Hollerith applies for patents for automatic punch-card tabulating machine that wins contract for 1890 and 1900 census.

1895 -- Thomas John Watson, age 21, joins National Cash Register as salesman.

1903 -- NCR boss John Patterson names Watson to head used cash register company, secretly owned by NCR. Watson succeeds in undercutting, then buying out, NCR's used-machine rivals.

1910 -- Watson becomes sales manager of NCR. American Cash Register Co. sues NCR for unfair competition.

1911 -- Hollerith loses 1910 census contract, sells business to Computing-Tabulating-Recording Co.

1912 -- U.S. government joins antitrust suit against NCR. Watson and other NCR executives tried, found guilty and sentenced to jail in 1913 on evidence that NCR salesmen interfered with and sabotaged rivals. An appeals court orders a new trial, which the government never pursued.

1914 -- Watson, fired by Paterson, vows to build a bigger business and is hired to run CTR.

1915 -- CTR holds first sales convention.

1917 -- CTR enters Canadian market under name of Interational Business Machines Co., Ltd.

1920 -- CTR, concentrating on tabulators, prospers during 1920s business boom.

1924 -- Watson renames company International Business Machines Corp.

1931 -- IBM builds first IBM-employees-only country club, in Endicott, N.Y.

1933 -- First government antitrust suit attacks IBM's practice of leasing machines and insisting users buy IBM cards; suit reveals IBM has 80% of markets for keypunches, sorters and accounting machines used for tabulating.

1935 -- IBM wins Social Security contract, one of several big New Deal contracts that shield it from the Depression. Watson is found to be highest-paid executive in the U.S.

1936 -- IBM loses antitrust suit; impact is minimal.

1937 -- IBM begins offering paid holidays and vacations; Thomas Watson Jr. joins company.

1939 -- IBM earnings surpass its four main rivals combined.

1939-40 -- IBM mistakenly lays off fewer than a dozen workers; most are later rehired. These are the only layoffs in the company's history.

1944 -- IBM begins sickness/accident plans.

1945 -- IBM begins retirement plan.

1946 -- Thomas Watson Jr. rejoins IBM after wartime military service.

1948 -- Bell Labs develops transistor.

1949 -- Watson Jr. persuades his father to fund computer research -- a late start.

1951 -- Remington Rand places Univac at Census Bureau.

1952 -- Watson Jr. becomes IBM president. IBM introduces first commercial processor, model 701, and within five years grabs 75% market share. Second government antitrust suit charges IBM with monopolizing card and tabulator market.

1954 -- Remington Rand sells first Univac to private company, General Electric.

1955 -- IBM sells its first commercial computer, a machine based on vacuum tubes, to Monsanto. Remington Rand merges with Sperry and is seen as challenger to IBM.

1956 -- Government antitrust suit settled; consent decree requires IBM to sell as well as lease machines and shrink its market share of cards to 50% in seven years.

1958 -- All IBM hourly employees, including production workers, placed on salary.

1959 -- Second IBM computer generation based on transistors is shipped.

1961 -- Computers and related products and services account for 75% of IBM revenue. IBM begins $5 billion development of 360, first of new generation based on integrated circuits, and most expensive corporate venture in U.S. history. Watson Jr. elected chairman.

1964 -- IBM moves headquarters from Manhattan to suburban Armonk, N.Y.

1965 -- Digital Equipment introduces first minicomputer. IBM's delay in entering that market is considered Watson Jr.'s greatest error.

1968 -- Control Data files antitrust suit against IBM for announcing "phantom computer." A month later, the government files a parallel suit that will last 14 years.

1969 -- IBM introduces minicomputer line, System/3, which customers reject for Digital Equipment and Data General machines.

1970 -- Watson suffers heart attack; resigns the next year.

1973 -- IBM and Control Data settle antitrust suit. Telex wins antitrust victory; judge finds IBM tried to monopolize peripherals business through predatory pricing.

1975 -- Telex decision reversed. Government antitrust trial begins.

1976 -- Wang introduces word processor with video screen, pioneering another market that IBM is slow to enter.

1977 -- Apple, Commodore, and Tandy begin selling personal computers.

1979 -- IBM net declines for the first time since 1951 due to shift from selling to leasing computers and inflationary cost hikes. Thomas Watson Jr. leaves board, becomes U.S. Ambassador to USSR.

1981 -- IBM enters personal computer market, breaking with tradition by creating autonomous unit to develop and market the computer, using independent dealers to sell it and relying on technology from other companies.

1982 -- Reagan administration drops government antitrust suit against IBM. IBM buys 12% stake in Intel that later rises to 20%; 1986 debt offering may trim that stake.

1983 -- IBM buys initial stake in Rolm; later acquires all of the phone-switchboard maker.Introduces PCjr home computer.

1984 -- PCjr is shipped, becoming IBM's most visible product failure. AT&T enters computer business. IBM settles European antitrust suit without making significant concessions.

1985 -- Agrees to swap Satellite Business Systems unit for a stake in MCI Communications Corp. Halts production of PCjr.

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