IBM Chairman Outlines Revamping To Top Managers

By Bart Ziegler
The Associated Press

December 4, 1991

New York -- IBM Chairman John Akers outlined his plan to decentralize the computer maker to his top managers during an all-day session Wednesday, according to an industry executive.

Akers discussed how he will give greater autonomy to International Business Machine Corp.'s business units, such as its division that makes personal computers, said the executive, who spoke on condition of anonymity.

Last week, Akers publicly announced the broad outline of his plan, designed to enable IBM's business units to compete more effectively in the fast-moving computer industry. He called it a "fundamental redefinition of how IBM does business."

IBM has been under pressure to boost its anemic profits and stem a loss in market share, which some analysts blame on the company's bureaucracy and delays in making decisions.

On Wednesday, Akers and his aides filled in many of the details for several hundred of the company's managers, who gathered at a hotel near IBM's Armonk, N.Y., headquarters.

Akers did not go as far as some industry reports and trade journals had speculated in decentralizing the company, the executive said. He did, however, announce plans for spinning offf some of IBM's smaller business units into separate subsidiaries.

Among them, IBM plans to form a separate business within IBM for its printer operations, with the eventual plan of turning it into a subsidiary with its own board of directors, the executive said.

IBM already has such an arrangement for its financing subsidiary, IBM Credit Corp.

Earlier this year, IBM sold its typewriter and low-end printer businesses, which became a separate company called Lexmark in which IBM holds a minority stake. The new printer company would include the printer lines not transferred to Lexmark.

Akers also said IBM will form a separate line of business for its computer disk drive operations, which now are part of its mainframe computer division, the executive said. Disk drives are memory devices that store data.

On Monday, IBM announced that the head of its mainframe division, Carl Conti, had moved up his retirement to Dec. 31 from next spring in light of the expected corporate reorganization, but it provided no details on the changes.

Akers and the other top executives also described changes Wednesday in how the business units account for their costs and how they charge each other for services and goods, the executive said. Such changes are aimed at allowing the units to report their revenues and profits publicly, which is rarely done at major companies.

Though Akers said last week IBM may seek more alliances such as the startling pact with Apple Computer Inc. announced last summer, no such alliances were disclosed Wednesday, the executive said.

IBM plans to disclose the details of its plan publicly on Thursday morning, said spokesman Rob Wilson, who had no comment on Wednesday's session except to confirm it took place.

IBM's stock price, which has been steadily declining in response to the company's sluggish performance, hit a 52-week low in trading Wednesday, falling $1.25 to $90 per share.

Copyright 1991. The Associated Press. All Rights Reserved.