"It's A Clean Sheet of Paper," IBM's Akers Says

By Bart Ziegler
The Associated Press

December 5, 1991

New York -- IBM Chairman John F. Akers said Thursday his plan for revamping the world's largest computer maker will send the company in new directions.

"It's clean sheet of paper for us," Akers said in an interview.

Among the changes, IBM will establish separate subsidiaries for many of its lines of businesses and will seek outside investors in some of these new companies. Some could even be spun off and their shares distributed to IBM stockholders, Akers said.

"The corporation will get out of the day-to-day operating mode" and could take the form of a holding company for the business units, Akers said in the telephone interview from IBM headquarters in Armonk, N.Y.

One benefit in forming subsidiaries is it gives IBM more choices, Akers said.

"If one or more become unattractive, we then have the flexibility to no longer be the sole owner," he said.

Selling stakes in the subsidiaries to outsiders could have other advantages, he added.

"We could have talent that could be brought from a partner," he said.

IBM also plans to look outside the company for investment opportunities.

"I'm talking about starting new businesses, buying new businesses that are ongoing, perhaps creating partnerships," Akers said.

"There are attractive areas of opportunity for growth that are tangential to the businesses we are in," he said. "If somebody has a head of steam and is looking for a partner and we have the requisite requirements, we could create a partnership."

IBM announced such a deal last summer when it agreed to form joint ventures with Apple Computer Inc. to develop advanced personal computers and software.

Akers wouldn't say what types of companies he is looking to for new partnerships.

Though the transformation of IBM is designed to improve profits and market share, it could bring an end to its no-layoff policy.

Akers said he believes IBM can cut costs far enough next year by eliminating 20,000 jobs through voluntary means, as it announced last week. But "if that doesn't get us in balance and we need significantly more reduction, then that will put the no-layoff practice on the table." he said.

In addition, he added, "Ultimately, the way in which these individual businesses manage their people will be their judgment."

Akers said he expects to report better financial results next year, but not due to the decentralization plan. The benefits from that, he said, are longer term.

Copyright 1991. The Associated Press. All Rights Reserved.