IBM 1997 Annual Report Download - page 9

processor and spreadsheet, flow to
users’ PCs or network computers
over both private networks and
public networks like the Internet.
•IBM’s breakthrough in copper
microchips promises a significant
increase in the capacity and speed
of semiconductors, as well as
reductions in cost. IBM has more
than 50 issued and pending patents
relating to the use of copper in
chips, and the first devices will
appear this year.
•We quadrupled the capacity of
hard-disk drives through IBM’s
patented giant magnetoresistive
(GMR) head technology, and pushed
the outer limit of future devices by
achieving a new world record in
storage density — packing more
than 10 billion bits (10 gigabits) per
square inch of disk surface.
FOURTH, we can always do better. Our
consumer PC business underperformed
the market in 1997. And we need to do
a better job of strengthening and
positioning our family of servers, with
particular attention to our AS/400 and
RS/ 6000 lines. We are tackling these
problems aggressively. We reorganized
our consumer PC business, introduced
new Aptiva offerings in the sub-$1,000
category (products that have been
selling well), and consolidated AS/400
and RS/ 6000 manufacturing, marketing
and development to reduce cost and
improve market effectiveness.
FIFTH, 1997 reminded us that there will
always be factors beyond our control,
macroeconomic factors that affect our
near-term performance. We saw this in
the striking negative impact of world
currencies and weakness in some
Asian markets. These conditions
continued into the first quarter of
1998, but at this writing we believe they
are short-term effects.
THE FINAL LESSON OF 1997 is how
much of our destiny we do control.
Because we are on the right strategic
path, and because the broad changes
that are transforming the global economy
play to IBM’s strengths, things are
increasingly going our way.
It wasn’t always like that. Just five
years ago, IBM was on the verge of
scattering its businesses to the four
corners of the information technology
world, to live — or die — within their
own industry sectors. We know now
what a mistake that would have been.
Our unique value proposition to
customers has been — and will continue
to be — precisely our ability to offer
integrated solutions that draw on
resources and strengths across IBM.
Today, with the shift to a networked
7
stock performance
1991- 97
939291 94 95 96 97
$ 75.75 $ 44.50 $ 25.18 $ 28.25 $ 36.75 $ 45.69 $ 104.63
93 94 95 96 97
total expenses as a
percentage of revenue
(after adjustments)
39.7
32.0
28.8 28.3 27.5
Year-end closing
prices adjusted
to reflect a two-
for-one split of
the common
stock effective
May 9, 1997