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Gerstner says job isn't over
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October 31, 1997: 8:13 p.m. ET
IBM now guns for leadership role, stresses importance of China market
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NEW YORK (CNNfn) - IBM Corp., which gave the stock market a huge boost of confidence earlier this week, may have caught a lucky star.
The legendary computer maker was credited by nearly everyone in the investment community for helping to turn around Monday's market turmoil with a $3.5 billion stock repurchase plan.
"I would admit to you that we could take some credit, but there's a fair amount of luck in that too," said IBM's Chairman and Chief Executive Louis Gerstner. (337K WAV) (337K AIFF)
"We don't time our buybacks to deal with day-to-day changes in the stock market," Gerstner said during an interview with CNN's "Moneyline with Lou Dobbs."
Nonetheless, Big Blue has asserted its worldwide leadership position in other ways.
With Gerstner at the helm over the last four years, IBM has turned itself around -- regaining lost market share and swinging into the black. As for the stock, IBM shares have gained more than $68 billion in market value under his tenure.
IBM has successfully positioned itself as an Internet solutions provider. The hardware company has effectively integrated the acquisition of Lotus Development Corp. and its Lotus Notes software into its business services.
Yet, the veteran executive -- who formerly served in the executive suites of RJR Nabisco Inc. and American Express Co. -- said his job isn't over.
"The next thing is: we can make IBM even better," Gerstner said. "We brought IBM back but we're gunning for leadership."
With the dominance of such companies as Compaq Computer Corp. and Dell Computer Corp., some skeptics say IBM's managers have their work cut out for them.
"It's very hard for them to get all the pieces in line and move forward at a leadership pace," said Bruce Stephen, group vice president of PC research at International Data Corp., a Framingham, Mass-based research firm.
"The latest example is its consumer business. They're not staking out a leadership position. It's very hard for them to get all the pieces welded together. They've made some really good strides but they're just not on the leading edge," Stephen said.
Gerstner himself says he is not yet completely satisfied.
"We think there's some things we can do for IBM that can help our customers in ways that will be a true leadership as we go out over the next few years, as this whole network world emerges," he said.
Part of that strategy includes focusing on the global marketplace. Gerstner was interviewed after meeting with Chinese President Jiang Zemin.
"I think the visit is very important...very important for China and very important for the United States," Gerstner said.
IBM's revenue growth rate for the region ranges between 50 and 60 percent annually. "Today if you look at it in terms of our revenue, it's small. If you look at it in terms of its future growth, we think it will be enormous," the executive said.
In this arena IBM has executed its strategy with success, supplying solutions from hardware to peripherals as well as targeted software services. "The array of capabilities is broader than that of Compaq," IDC's Stephen said.
"Our biggest constraint is hiring good people. The demand is almost [insatiable] and it's serious demand...very sophisticated demand," Gerstner added.
-- by staff writer Robert Liu
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