Computer market malaise forces cuts, restructuring IBM slashes prices on personal line

May 21, 1991|By ASOCIATED PRESS

NEW YORK (AP) -- IBM cut prices on many of its personal computers yesterday, following reductions on other models last month. The cuts are part of an industry trend that is prompted by the recession and increasing competition.

Analysts say the price reductions by IBM and other PC manufacturers are hurting profit margins at computer makers and computer retail stores alike. But they signal an opportune time for computer buyers.

Personal computer prices typically drop by 15 percent to 20 percent a year even without a soft market due to the continual decline in the cost of computer components, said Rick Martin of Prudential Securities Inc.

What is notable about the recent price cuts is they have not always coincided with new-product announcements, as is usually the case.

"A soft economy is forcing them to take cuts before the products are ready," Mr. Martin said.

For example, he said, the price cuts announced by IBM include the low end of its personal computer line. IBM is not expected to unveil replacements for these models until next month.

In recent weeks, price cuts have been announced by Compaq Computer Corp., Zenith Data Systems, Dell Computer Corp., AST Research Corp. and Toshiba Corp.

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