8 April 2002 IBM has warned that its first quarter profit and revenues will be lower than expected. In response, the company’s stock fell by a tenth on the New York Stock Exchange to their lowest level since January 2001.

The system giant’s first profits warning since 1991 also dashed hopes of an imminent recovery in the technology sector. As a result, shares in other major computer companies, such as Sun Microsystems and Microsoft, also dropped.

IBM expects to post net income of between $1.65 billion (€1.88 billion) and $1.75 billion (€2 billion) – about 12% lower than analysts’ consensus estimates. In addition, it says it expects to post revenues of between $18.4 billion (€21 billion) and $18.6 billion (€21.25 billion), against analysts’ expectations of about $19.65 billion (€22.46 billion).

In the same period a year earlier IBM posted revenues of $21 billion (€24.01 billion). However, 2001 saw a steady deterioration in the company’s finances as the year wore on.

Nevertheless, the company stressed that the first quarter is always its weakest. IBM admitted that its original equipment manufacturer (OEM) business was hit especially hard.