IBM struggled in first quarter

IBM announced mixed results with profits rising a modest 3 per cent to $1.52

billion, while sales fell 5 per cent to $19.3 billion. IBM CEO Louis Gerstner

blamed the impact of the Y2K problem on the slower sales as many companies

operated under a first-quarter "lockdown’ that prevented investments in

new equipment. "This was a transitional quarter, as we expected, with Y2K

lockdowns continuing until late in the quarter. We continue to believe 2000 will

be a good year for IBM."

Growth rates in access of 10 per cent are not expected until at least the

second half. Revenues from the hardware unit, which includes mainframes,

minicomputers, workstations and PCs, dropped 12 per cent to $7.7 billion.

Personal computer revenues fell from $3.8 billion to $3.3 billion as the company

moved to exit the U.S. consumer retail business it pioneered. IBM's Global

Services division revenues were flat at $7.6 billion and software revenue was

also unchanged at $2.9 billion.