COMPUTERS: The Elephant Tries to Dance

The Elephant Tries to Dance

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To corporate customers, computers once meant IBM mainframes. But that has changed as high-powered workstations and personal computers from such companies as Compaq, Apple and Sun Microsystems have won over legions of business users. As a result, IBM's earnings have slipped from $6.6 billion in 1984 on total sales of $46 billion to an estimated $5.5 billion last year on total sales of $60 billion. In an attempt to cut its costs and become a more nimble competitor, IBM last week announced its fourth belt-tightening program in three years.

Big Blue plans to eliminate 10,000 jobs from its U.S. payroll of 216,000, mostly through attrition and early retirement. IBM has already eliminated 20,000 jobs during the past two years by the same means. The company will also spend as much as $4 billion in a stock repurchase to boost its sagging share price. Some industry analysts predict more cuts as IBM shifts its emphasis to the smaller and more flexible computer systems offered by its rivals.