7 May 2002 IBM CEO Sam Palmisano says that current trading is so bad that the systems vendor will be forced to “pare back” its operations. Palmisano made the remarks in a speech to IBM employees at the end of April, which was subsequently leaked to Bob Djurdjevic, president of consultancy Annex Research.
According to Palmisano, IBM has so far developed its business strategy “based on the assumption that we would have huge, robust growth”. However, he conceded that “the industry isn’t bouncing back this year” and added that the industry will not return to its typical growth rate of about 10% next year either.
Such a gloomy outlook is not news for many financial and technology industry analysts. However, Palmisano is one of the first senior executives in the industry to make such pessimistic predictions about the future.
Since the leak, IBM has been anxious to point out that Palmisano’s remarks were based on analysts’ forecasts.
IBM’s stock fell by 7% to $76 (€83.1) by the close of trading on the New York Stock Exchange yesterday. It was the first time that the company’s shares price had closed below $80 (€87.44) since 1998 and is now far from its 52-week high of $126.39 (€138.14).