
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, March 25, 1994                   TAG: 9403250231
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: The Washington Post
DATELINE: WASHINGTON                                LENGTH: Medium

IBM SEES `PHOTONS' AT TUNNEL'S END

One year into a job he described as ``draining a swamp,'' IBM Chairman Louis V. Gerstner suggested Thursday that the water level was down significantly. But he offered no predictions as to when the company, which last year lost $8 billion, would return to prosperity.

In a much-awaited address to Wall Street analysts, Gerstner reiterated his view that International Business Machines Corp. should not be broken up. He said he was making it more efficient and focusing its energies on new technologies and on getting its many parts to work better together.

Gerstner conceded he wasn't telling his audience much it hadn't heard before. In what he termed a ``broad-brush'' presentation, he declined to give details, saying variously that it was too soon, would take too long or would give valuable information to competitors.

``You must understand I am not trying to create a complete IBM makeover, a brand-new IBM,'' Gerstner told the group in a darkened Manhattan auditorium. ``but rather, a sense of urgency, direction and engagement.''

Bob Djurdjevic, an IBM watcher who heads Annex Research Inc. of Phoenix, said many of the points matched those made by Gerstner's predecessors. That is the most common criticism of Gerstner - that he has not changed the company's direction in a radical way, but, with a few exceptions, has focused on trying harder to make its old strategy work.

Former IBM executive Sam Albert had a more sympathetic view: Gerstner has ``had an amazing first-year learning curve, and demonstrated with this speech the complexity of the industry... He also made it clear that he is trying to be a change agent in a company that has a hard time changing.''

Gerstner became chairman April 1, with a mandate to turn around the faltering company. Soon after, he appalled some stock analysts and media commentators with a remark that a vision is ``the last thing IBM needs.'' Thursday, he tried to put that behind him with a three-sentence vision statement that said IBM would ``be the world's most successful and important information technology company,'' would introduce technology to customers and continue to be a technological pioneer.

``Well, that's it,'' he joked. ``Thanks for coming.''

He went on to outline a number of areas of focus and reported progress in all of them:

Reversing past practices in which the company made breakthrough discoveries in its laboratories but let others turn them into salable products.

Increasing the company's standing in client-server technology, in which personal computers are wired together to share information between one another and larger computers.

Taking part in building the information highway, a coast-to-coast grid of data links that would carry films, telephone calls, video conferences and shopping services. He said IBM did not need to ``strike a megadeal with any one company.'' Instead, it will try to provide technology to all companies.

Expanding its stake in emerging markets such as China, Southeast Asia and Latin America.

Gerstner appeared with the top management of the company, a rare turnout. His chief financial officer, Jerome York, said IBM's recent financial performance - it managed a small profit last quarter - was ``at least a few photons, if not light at the end of the tunnel.''

by CNB