Salomon cuts IBM's Q4 sales view by $400 m.

NEW YORK: Salomon Smith Barney analyst John Jones on Wednesday said he cut

his fourth-quarter sales estimates for International Business Machines Corp.,

pointing to slow Christmas sales of personal computers as well as a

slower-than-expected recovery in the hard disk drive business.

Jones also cited a greater-than-expected impact to sales from currency

translations for the world's largest computer maker.

Those factors led Jones to reduce his view of IBM's revenue growth on a

constant currency basis from 13.7 per cent to 11.7 per cent for the fourth

quarter. That would mean reported sales of $25.7 billion, or growth of 6.3 per

cent, compared with a third-quarter increase of 3 per cent.

Jones maintained his fourth-quarter estimate of earnings per share of $1.48,

which is still two cents above the analyst consensus estimate as compiled by

First Call/Thomson Financial. He said new mainframe shipments are a notable

positive this quarter, saying the machines have tested well and that a few

hundred have shipped during the quarter.

"Our slightly more conservative constant-currency forecast reflects

three items," Jones wrote in a note to clients, explaining his reduction of

sales estimate by $400 million. "Currency is expected to impact results by

$1.3 billion, rather than $1.2 billion;" Jones wrote. "Softer PCs -

given industry trends for slow Christmas sales despite healthy discounting - and

a tempered hard disk drive recovery where despite business wins, high-end server

drives have not picked up as expected.

IBM's stock added $3-7/16 to $88-1/4 on the New York Stock Exchange.

(C) Reuters Limited 2001.