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Pass the NoDoz: IBM Offers Little on Its Fourth Quarter

Despites some stumbles, Big Blue talks its strengths, says it's on plan.

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You knew it wasn't going to be pretty when, two minutes into


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analyst meeting, CFO John Joyce said the company wouldn't be saying anything about the fourth quarter.

In general, the two-and-a-half hour Webcast of the meeting was as soporific as that of


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last week. CEO Lou Gerstner spent most of his time pumping the company's strengths. He beamed over the momentum IBM has gained in the Unix server space. He talked about the immense cash flow generated by the mainframe business. And, above all, he reiterated IBM's commitment to its services business, a segment that has produced very strong order backlogs in the last two quarters.

"50% of the $1 trillion opportunity in e-business comes from services," Gerstner said. "It dwarfs the other categories. It's growing 20% a year, and that's the business we lead across the world."

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The reformulation of IBM as an e-business powerhouse lit a fire under the stock more than a year ago, but a series of missteps by management have made the story much less compelling on Wall Street lately. Still, Gerstner told analysts, IBM remains on plan. He noted that the company has hired 9,000 people for its services operation this year alone -- about one-quarter the number of consultants at


, for which competitor



has said it's willing to pay as much as $18 billion. With growth in IBM's hardware business clearly anemic, the company continues to see consulting as the best way to hit its long-term target of sales growth in the high single digits.

Gerstner stayed on that message for much of the meeting. But despite Joyce's assurance that no new information concerning the current quarter was forthcoming, bears starving for fresh signs of weakness in Big Blue may have been appeased, after all. President Sam Palmisano confessed that some shipments of the new Z900 mainframe system will be pushed out beyond the mid-December shipping date. "We're not going to have the supply to satisfy all the customers that want the Z900 in Q4," he said.

Gerstner waxed realistic. "We're a $90 billion company. We'll have execution issues every day."

After-hours investors didn't find that comforting. The stock fell $1 on


to $99.