International Business Machines Corphas started the year aggressively, but industry analysts said
the company still faces some tough rounds in its fight to stop
a two-year earnings slump.
    "I am more impressed with what's happening at IBM than I
have been in a long time," said PaineWebber analyst Stephen
Smith.
    "But they're not out of the woods yet," he added.
    At 1.30 dlrs a share, IBM's first-quarter net income easily
topped most estimates on Wall Street, which had ranged from an
even dollar to 1.20 dlrs.
    Most analysts said they were pleasantly surprised by IBM's
performance. But they indicated that IBM's chances for a full
recovery hinged on several key factors whose impact will not be
felt until later in the year.
    These include the success of IBM's new personal computer
line, introduced two weeks ago, and its 9370 minicomputers,
which will begin volume shipments in July.
    In addition, IBM has said the full benefits of its
early-retirement program and other cost-cutting moves will
emerge as the year progresses.
    Analysts noted that IBM chairman John F. Akers was
relatively more upbeat in assessing the company's outlook than
he has been for nearly a year.
    "Although the worldwide economic situation remains
unsettled, there are some encouraging signs in our business,"
Akers said, pointing to, among other things, higher
first-quarter shipments. "We remain optimistic about the
prospects for both the industry and IBM," he said.
    "Akers was most encouraging," said PaineWebber's Smith.
    A weak dollar, a lower tax rate and strong mainframe
computer sales all contributed to the better-than-expected
first-quarter results, analysts said.
    "Shipments of the 3090 mainframes were very strong in
March," after a weak January and February, said Ulric Weil of
Washington-based Weil and Associates.
    Sales of the top-of-the-line mainframes, commonly called
the Sierras, "bailed out the whole quarter," Weil said, adding,
"If this continues, it augers well for the rest of the year."
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