St Remy is a sleepy village of 4,500 in the Rhone valley of Provence, about 50 kilometres northwest of what must be the favourite town of RS/6000 users, Aix. St Remy wasn’t very big on December 14 1503, either, the day Jacques and Renee de Nostradame were blessed with a son, whom they named Michel. […]
St Remy is a sleepy village of 4,500 in the Rhone valley of Provence, about 50 kilometres northwest of what must be the favourite town of RS/6000 users, Aix. St Remy wasn’t very big on December 14 1503, either, the day Jacques and Renee de Nostradame were blessed with a son, whom they named Michel. The fathers of both parents were physicians. Their son, Michel, would become a doctor, too. During his lifetime, Michel de Nostradame was renowned for bravery and skill in battling the plagues that swept his region, but that is not what brought him immortality. Rather, Michel Nostradamus – the name Latinised according to the custom of his era – is famed for his prophetic writings. Centuries, the collections of Nostradamus’ verse was first published in 1555 and expanded in 1558. Almost immediately, the books attracted the attention of royalty and clergy, a very risky proposition at the time.
The sixteenth century is famous for its great artists, writers and musicians and notorious for its hostility to ideas that ran contrary to those in power. Kings had, and often used, their absolute power. The Inquisition was making life tough for alleged heretics. Witch burnings were commonplace. Thus, the publication of books purporting to forecast the often unpleasant fates that lay in store for nations and their rulers, and for the Church and its Popes, was a most alarming act. Yet so skillfully did Nostradamus write his cryptic verses, and so brilliantly did he consult with the royal and the holy, that he emerged not only intact but honoured. To this day, admirers of Nostradamus insist that Centuries accurately predicts natural disasters, wars and other major events into our own time and beyond. They make a surprisingly strong case for the doctor’s visions, many of which, nearly four hundred and forty years later, can be examined as history. The record, as interpreted by the faithful, is very good. This is more than can be said for many other forecasters, whose writing is just as hard to decipher as that of Nostradamus and whose hubris is incomparably greater. Chief among the self-styled visionaries of this day and age are Wall Street analysts. Plenty of hard facts that should long since have discredited the majority of these oracles can be found by any interested party, even if one’s focus is confined to the affairs of IBM. With too few notable exceptions – Stephen Smith of Paine Webber is prominent among them – the world’s investment advisors forecasted glory for Big Blue right up to the moment the company went into the toilet. Some persisted even longer. Then, when IBM’s share price collapsed, as it eventually had to, the analysts revised their predictions with the same supreme confidence that they had exhibited, for no reason, before. They pointed to the company’s huge debts, which had apparently been invisible before, and to the way desktop computers and their clever software were making mincemeat of the mainframe. The only difference of opinion in the suddenly doomsaying crowd of analysts was in the means of IBM’s imminent demise: would it be a bank or be Windows? Now Wall Street is warming up to IBM again. With the help of influential boosters, IBM shares have risen from the forties to the fifties. Profits made what may turn out to be a brief appearance during the fourth quarter, but at least they showed up. Big business, at least in the United States, seems to be taking more interest in mainframes.
By Hesh Wiener
(Wall Street’s wizards do not seem to have noticed that the rate at which customers are buying more MIPS may be outpaced by the rate at which IBM has had to drop the price of the MIPS.) Millions of people worldwide bought newly affordable IBM personal computers. (The adoring analysts may be surprised if Compaq outsells IBM during 1994, even though the trends point in that direction. Nor have they factored in the effects of the dissemination of a bus developed by Intel that will give cheap little computers the input-output speed of mid-range systems.) Then there’s the matter of IBM’s service business,
which the company’s leaders and Wall Street’s followers have singled out as the new great source of revenue and profit for Big Blue. The revenue forecast seems to be working out: IBM booked $9,700m in services revenue during 1993. The profit side of the picture doesn’t seem to be quite as bright. IBM says its gross margin in services was 14.7% for the year; it was a mere 11.5% during a fourth quarter that accounted for a third of the year’s revenue. IBM’s selling, general and administrative overhead during 1993 was $18,300m or 29.2% of revenue. If SG&A is uniform across IBM’s various endeavours, the services business was deeply in the red last year, losing nearly 14.5% of its revenue, or $1,400m. This is our conjecture: IBM does not specifically attribute SG&A to lines of business. A similar analysis of IBM’s hardware sales, which had gross margins of 32.3%, suggests there is a problem there, too. If hardware-related SG&A is at the company average, IBM had a surplus of 3.1% of revenue without paying for research and development. Research and development, trimmed by nearly 15% from its 1992 level, was 8.9% of revenue. If only half IBM’s R&D costs go toward creating new hardware, IBM may have lost 1.3% of $30,600m in revenue, or nearly half a billion dollars. Without putting too fine a point on the matter, it is reasonable to say that IBM’s hardware business was run on a break-even basis during 1993. What it comes to is that IBM’s remaining sources of profit – software, maintenance and financing – must bail out the services business and shore up the hardware business before the company pays its first penny to shareholders. The situation will become even more difficult during 1994, for IBM is pushing for growth in services. IBM is also trying to adjust to rapidly declining mainframe sales, which it says were off 30% in the fourth quarter on a year-to-year basis and which it expects to fall 50% during 1994 from 1993. IBM’s treasurer, Jerome York, expects personal computers and workstations to fill the revenue gap, but concedes that RS/6000 sales during the fourth quarter rose only 4%.
While PC sales jumped 35% during the same period, the comparison was easy: IBM was just getting started in the low end of the PC business during 1992’s fourth quarter. Nonetheless, IBM executives and their Wall Street sycophants predict quite specifically improved financial results from Big Blue’s operations during 1994. Pay them no mind. You’re better off trying to sort it out with the soothsaying of Nostradamus. We are intrigued by the following verse. The Tree could refer to IBM’s Armonk headquarters, situated in an old apple orchard, and the reference to Bourbon might have something to do with IBM’s leaders, past and present, rather than the French royals.
Princes and Lords, all who are accustomed to make war,Cousin German, brother with brother,Ended is The Tree of the happy line of Bourbon.The very lovable Princes of Jerusalem,Ended by the commission of an enormous and execrable deed.The people will feel the effect when the bottom drops out of their economy.
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