He came to praise Big Blue, and praise it he did.
IBM chairman Louis Gerstner focused on the technical successes at the company's annual meeting Tuesday in Chicago, while reviewing the record earnings, revenues, and share price IBM attained in 1997. Gerstner, who took the reins in 1993, has led the effort to remake the world's largest computer company.
"In terms of business performance, 1997 was a very solid year," Gerstner said. "In terms of technology performance, I think we can call it a great year."
IBM said it had raised its dividend by 10 percent and expanded its stock buyback program by US$3.5 billion. In the past year it has introduced breakthrough technologies, including using copper in wiring chips and guiding the rover deployed on Mars during the Pathfinder mission.
Gerstner faced a friendly audience, and many of the shareholders prefaced questions with words of praise or thanks for the turnaround IBM has accomplished during his tenure. But some shareholders pressed Gerstner for details on how IBM planned to spark faster growth.
One, Kul Kapoor from Las Vegas, was among several who used their question time to urge Gerstner to be more aggressive in seeking acquisitions or new business initiatives. "The number one thing in life is taking risks and sometimes it looks like IBM doesn't want to take risks," Kapoor said after the meeting.
Gerstner offered few specifics in terms of pointing to new growth opportunities for IBM, but did single out two general areas he called the most important that are available to the company. The first was one he referred to as "deep computing," a segment that combines very fast computers with sophisticated analytical software.
IBM has already won major contracts in this area, including a high-profile deal to develop a supercomputer the US Department of Energy plans to use for nuclear weapons simulation testing.
Others could emerge as drug companies use the technology to simulate chemical reactions, for example, or as more companies adopt data mining, where enormous amounts of customer and sales information are sifted to discern trends used in forming marketing strategies, he said.
The second area, a somewhat more nebulous one he called "pervasive computing," is emerging as computers shrink ever smaller, he said. The progress on size makes it possible to embed computers in a wide range of products, he said, ranging from household appliances to cars.
The pervasive computing area is one where Sun Microsystems' Java programming environment will be a major factor, Gerstner said, at one point urging Sun foe Microsoft to drop its battle over the development of Java.
"We believe strongly in Java and hope Microsoft will embrace Java, 100 percent pure Java, and join the rest of the market," he said.
Gerstner also disputed the idea that IBM could match the meteoric growth rates of other technology companies. "Keep in mind that as an $80 billion company, we will never grow at the kinds of rates that Internet companies, for example, will," he said.
As for acquiring competitors like Unisys Corp., as investor Kapoor had suggested, Gerstner said, "We probably grew a Unisys last year in our services business."
He also noted that IBM had made 45 acquisitions since 1995 and would consider others, although the company would proceed cautiously and was often "as pleased with the acquisitions we did not make as the ones we did."
