Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 26, 1995 TAG: 9504260098
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: CHARLOTTE, N.C. LENGTH: Medium
Just before the meeting, IBM's directors again voted to hold its quarterly dividend at 25 cents a share, provoking a groan from many shareholders when the decision was announced.
Several expressed dismay that shareholders were not reaping more from IBM's rebound.
After a $3.02 billion profit for all of 1994, IBM last week posted first-quarter earnings of $1.29 billion, its best performance ever for the first three months of the year.
A shareholder who suggested the board consider a dividend increase at its next meeting was strongly applauded.
But Gerstner said the dividend was just one measure of the company's return to investors. He noted the company's stock, which hit a low of $41 in August 1993, was trading above $90 this week.
``Having the stock go up is much more important than a nominal increase in the dividend,'' Gerstner said.
Although the discussion was mildly heated, it still contrasted sharply with the previous two annual meetings run by Gerstner, when the shareholder complaints concerned IBM's losses.
The audience Tuesday was sprinkled with retirees, owing perhaps to their reliance on stock dividends for income.
``You can say you should be able to sell the stock for more than you could a few years ago, but I would prefer to have the stock in my estate and have the dividends,'' said Andy Amundson of Easley, S.C., who retired from IBM eight years ago and has owned its stock for 40 years.
The dividend was less important to shareholder Sandy Kovacic, a young mother and homemaker from Charlotte. She started acquiring IBM stock when it exceeded $100 a share and is eager to recover her initial investment.
``I'm happy with the progress of the price,'' she said. ``But we have a while more to gain. Eventually, we'll get our money back from it.''
In his speech, Gerstner said the world's biggest computer company's leadership in the industry no longer meant promising more than one can deliver or making products on technical standards that were different from competitors, which IBM did for decades.
``As an industry, we do a great job of creating technology, of promoting it, of talking about it, and generating a lot of excitement about it,'' Gerstner said.
But he said the industry in general doesn't answer basic questions for customers, including the key one: ``Do I always need the latest, fastest, smallest piece of technology?''
``If technology is going to touch everyone's lives, change every institution and be truly ubiquitous, then we have got to demystify it,'' Gerstner said.
by CNB