IBM too quiet for its own good

A decision made in Australia that IBM New Zealand should not, for the first time, announce its local results ranks as one of the worst public relations blunders for many a year. It's been widely thought for some time that IBM locally had a bad fiscal 1997. Managing director Gowan Pickering has described it merely as a flat year. The official reason for not publicly announcing the results is the 'ANZ' model adopted by IBM, a matrix reporting model where New Zealand staff report into Australia and other centres.

A decision made in Australia that IBM New Zealand should not, for the first time, announce its local results ranks as one of the worst public relations blunders for many a year.

It's been widely thought for some time that IBM locally had a bad fiscal 1997. Managing director Gowan Pickering has described it merely as a flat year.

The official reason for not publicly announcing the results is the "ANZ" model adopted by IBM, a matrix reporting model where New Zealand staff report into Australia and other centres.

But as a legal entity, the local subsidiary will eventually have to report its results to the Companies Office.

In the meantime, the decision leaves IBM wide open to speculation about its performance.

Market researcher IDC has received no response to its request for information. "Everyone's clamming up," says IDC manager Graham Penn, who's not prepared to publically speculate.

Results are always open to manipulation, depending on how and when companies recognise revenue. For example, some will take revenue based on the signing of a contract; others only when equipment or services are physically delivered.

IBM took some big hits in 1997.

It dropped out of the retail PC market and, anecdotally, has not performed well in the corporate market where it is thought to have fallen some distance behind market leader Compaq, Hewlett-Packard and Digital.

It lost out on big deals at Tranz Rail, to CSC; and at EDS, to Amdahl. ICMS has been a success story internationally but most revenue from that stays overseas. The big killer is likely to have been the Police project INCIS. A new contract was renegotiated late last year but IBM was said to be haemorrhaging previously, to the tune of many millions of dollars.

In 1996 IBM reported around $282 million in revenue and a $9 million loss. Market speculation on the 1997 performance is that revenue may have been down; the range of picks is from $250 million to $290 million. Most people to whom Computerworld spoke were expecting a loss of more than $20 million.

All will be revealed in time, when the figures are lodged with the Companies Office. But as experience shows, many organisations manage to stave off doing that for more than a year, tending to relegate such figures (they hope) to the dustbin of history.

It's not as if, under the ANZ arrangement, IBM New Zealand doesn't know its numbers. After all, IBM Australia has announced its figures, so it can unscramble eggs.

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