IBM PC unit loses $992M

Big Blue CEO Gerstner declares end of PC era, emergence of network

New York -- March 25, 1999 -- 8:21 a.m. ET -- (CNNfn) - IBM had a pretax loss of nearly $1 billion last year on its personal computer business, sharply more than in previous years.  IBM's annual report showed a loss of $992 million before taxes in 1998 on its PC unit. That compares with losses of $161 million in 1997 and $39 million in 1996.

IBM Chief Executive Louis V.  Gerstner asserted in a letter to shareholders that "the PC era is over." The annual report noted, however, that while revenue from its PC unit fell 10.9 percent in 1998 from 1997, the second half of 1998 showed marked improvement.

"Indeed, IBM's own PC business was an important turnaround story in 1998," Gerstner said. "But the PC's reign as the driver of customer buying decisions and the primary platform for application development is over. In all those respects, it has been supplanted by the network."

IBM has been trying to reconfigure itself as a leading-edge technology company, not just a PC maker.  Earlier this month, IBM and PC vendor Dell announced a $16 billion deal in which Dell will purchase storage, networking, microelectronics and display technology from IBM.

Overall, IBM's earnings rose last year to $6.3 billion from $6.1 billion in  1997 and $5.4 billion in 1996.

IBM stock closed up 4-1/8 at 169-1/2 on Wednesday.

Copyright 1999