IBM announces actions to further streamline company
Outlines plans to increase independence of business units
Armonk, N.Y. -- November 26, 1991 -- (Business Wire)--IBM Chairman John F. Akers Tuesday announced further actions to streamline the company and outlined a plan to reshape IBM into an organization of increasingly independent businesses and companies.
"In recent years, IBM has taken important steps to improve efficiency and increase autonomy," Mr. Akers said. "Over the next few weeks, we will be disclosing measures that will significantly advance that process and will lead, over time, to a fundamental redefinition of how IBM does business."
The streamlining action will primarily involve additional reductions in the company's worldwide workforce, resulting in a charge to earnings. The plan to reshape the company will make IBM businesses around the world more independent and more responsive to customers and markets.
Restructuring and Related Actions
"We are seeing improvement in the pace of business as shipments of our new product lines build, and we believe fourth-quarter operating results, before any special charges, will be our best this year," Mr. Akers said. "However, the environment around the world, with few exceptions, continues to be difficult and highly uncertain, and the industry remains highly competitive. As an important part of our plan, therefore, we will continue efforts to lower costs and increase our competitiveness."
The primary focus of the restructuring will be an additional worldwide workforce reduction of approximately 20,000 employees. This, along with asset and other restructuring actions, will result in a charge of about $3 billion against fourth-quarter earnings. The restructuring actions are expected to result in savings of about $1 billion in 1992 and about $2 billion each year thereafter.
Plan to Create More Independent Companies
"We will be taking a series of steps to enable each business unit to better focus on its own opportunities, be more responsive to its own customers and accountable for its own results," Mr. Akers said.
"Because each business is different, the degrees of independence will range across a spectrum. However, each will be subject to intensified market discipline. At the same time, IBM will retain its unique capability to provide integrated solutions to customer problems," Mr. Akers said.
Among the changes IBM will be implementing over time are:
Focused Marketing and Services Companies. The IBM marketing and services companies, organized by geography, will focus on market segments based on the companies' own judgments of opportunities. They will be able to combine the best product and service offerings from IBM and, as appropriate, from other companies, thus providing total solutions that are tailored to customer needs.
More Autonomous Manufacturing and Development Businesses. The IBM manufacturing and development businesses, organized by product, will concentrate on being the lowest cost manufacturer of state-of-the-art information systems. One of their key objectives will be to shorten substantially product development cycles. They also will be increasingly free to pursue a variety of distribution channels.
Clear Financial Accountability. Each major business unit or company, over time, will report individually its financial results, and the compensation of its executives will be tied more directly to its performance. The resulting clarity and accountability will improve performance.
One result of these changes will be greater investment flexibility for IBM. The corporation will identify areas of potential growth and manage investments in the most promising possibilities among current businesses, alliances and partnerships, as well as new ventures.
CONTACT: IBM Corporation, Armonk Rob Wilson, 914/765-6565 13:13 ET