Return to profitability for IBM NZ

After losing more than $100 million in the previous four years, IBM New Zealand is celebrating a return to profitability.

After losing more than $100 million in the previous four years, IBM New Zealand is celebrating a return to profitability. The company posted a $16 million profit on revenues of $307 million for the financial year 2000. Globally IBM’s net income was up 16% to $US8.1 billion compared with 1999.

IBM New Zealand managing director Nick Lambert attributes the result to a return to business fundamentals – execution of sales and expense control. He also praises the company’s staff which now stands at 800 people, 100 up on last year although headcounts in the past were usually around 1000.

“It is pertinent that this is the first profit in five years,” he says. “Returning the business back to profitability is important. We’ve righted the wrongs and we’re extremely optimistic looking out.”

Major wins for IBM last year include the supply of servers and a call centre to Baycorp; a three year multi-million dollar services contract including e-business consulting and development, plus server and storage products with Contact Energy; provision of Netfinity servers, 300 PCs, Thinkpads to the Ministry of Health; and the sale of a Shark storage system, RS/6000 server to Auckland University.

Lambert says increases in business were even across hardware sales, software sales and services.

“E-business is the most critical areas for us. There are a lot of opportunities in e-enabling legacy systems and storage is a growth product all over the world. We did well with Shark last year with Contact Energy and the University of Auckland – even though it was an area we were late getting into.”

Lambert says IBM’s adoption of e-business internally helped with expense control and projects such as e-procurement have made a significant difference.

It was a very different story from IBM last year when it made a loss of $29 million on revenue of $335 million. It blamed the loss on restructuring costs and exiting the police computer Incis contract. Bad publicity from Incis dogged the company for most of the year. It also lost a major Telecom contract to EDS although EDS continues to be a major customer, says Lambert.

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