IBM Chairman John Akers said yesterday that the computer giant's U.S. sales remained sluggish but that a healthy increase in overseas business is keeping overall earnings for the company at about the same level as in the first quarter.
Speaking to more than 100 securities analysts yesterday in IBM's San Jose, Calif., facility, Akers said that the company's U.S. revenue continues to be below 1985, but that overseas sales, with the help of a declining dollar and signs of improvement in Canada, are running about 20 percent better than a year ago.
"Worldwide revenues, bolstered by strong growth in services, are modestly up," Akers told IBM's annual meeting with analysts.
But the new IBM chairman pointed out that in "these key business indicators we have not yet seen a turnaround" in the United States.
While Akers expressed some optimism about chances for industry growth through the end of the year, he emphasized that the $50 billion-a-year (sales) giant has been taking numerous steps to cut costs in order to improve profitability.
IBM in its first quarter reported a 3.1 percent rise in profits from last year, to $1.02 billion, up from $986 million.
Akers said IBM will continue a strong pace of investment this year to assure product leadership and volume production in coming years. The company now accounts for about 40 percent of the computer industry's total sales.
"In 1986, expenditures on research, development and engineering will exceed those of 1985 by 7 percent, on top of an increase last year of 12 percent," Akers said.
Akers, who became chairman June 1 when John Opel retired, also said he does not expect to see much growth in domestic sales of personal computers this year.
Akers said the company has cut spending on items such as executive meetings, travel and consulting services by $700 million last year and expects further reductions this year.
IBM, the world's largest computer company, cut overall expenses by 9 percent in the first five months of the year, he said.
IBM stock, which was off more than 2 points for much of the day yesterday, closed down 1/2 to 146 3/8.