"We found ourselves struggling in the first quarter," Palmisano said yesterday at IBM's annual meeting in South Carolina. "We attribute most of it to our own execution. It was us. It was our inability to close deals."
It was not known how much the move would amount to in savings for the world's biggest computer services company.
Palmisano's remarks came hours after the company announced its biggest-ever stock buyback plan and an 11% increase in its dividend.
The moves may help him restore investor confidence in IBM after a missed profit forecast and the stock's longest losing streak in more than three decades this month.
He also may cut as many as 10,000 jobs to help stem costs, UBS analyst Ben Reitzes said yesterday.
"With the tepid revenue growth, they have to do something," said Sunil Reddy, who helps manage $103 billion, including 1.58 million IBM shares, at Fifth Third Bancorp.
IBM, based in Armonk, N.Y., saw its shares drop 18% this month, before yesterday. The stock fell 14 days in a row this month. Shares were up 82 cents to $75.43.
The computer company's first-quarter sales grew 3% to $22.9 billion, the slowest pace in 10 quarters, and profit from continuing operations rose to 85 cents a share, lagging behind the 90-cent average of analysts' estimates.
IBM reported less than $293,000 in sales per employee last year, less than the $891,000 at Dell, the $529,000 at Hewlett-Packard, and the $320,000 at Sun Microsystems, according to Bloomberg News data.
Electronic Data Systems, the No. 2 computer- services company after IBM, generated $177,000 per employee.
IBM said sales stalled in the final weeks of the quarter as demand for software programs withered and clients pared orders for computers ahead of IBM's planned sale of its PC unit to China's Lenovo Group.
IBM's dividend increase brings the quarterly payment to 20 cents a share, up from 18 cents. It is payable to holders as of May 10, IBM said. The total payout will be $326.5 million a quarter.
Originally published on April 27, 2005