Slumping IBM stock was weight that held down Dow in 1992

January 01, 1993|By Bloomberg Business News

NEW YORK -- The Dow Jones industrial average would have been about 85 points higher in 1992 if it weren't for International Business Machines Corp.

IBM single-handedly knocked 2.6 percent off the Dow industrials. The Dow hit a record high of 3413.21 on June 1. The blue-chip index now hovers just above the 3300 level.

"The index's entire loss since June can be attributed to IBM," said Jack Solomon, market analyst at Bear Stearns Cos.

The slump in IBM shares is most pronounced since Dec. 15, when the company announced its latest multibillion dollar restructuring. IBM's stock is down $13 in the past two weeks, shaving more than 28 points off the Dow industrials.

IBM, the world's biggest computer maker, announced plans to take a $6 billion charge against fourth-quarter earnings to eliminate another 25,000 jobs and consolidate its manufacturing. the past six years, IBM has taken restructuring charges on five other occasions.

IBM, based in Armonk, N.Y., is expected to report its first-ever operating loss in the fourth quarter. The company also is expected to slash its once-sacrosanct annual dividend of $4.84 a share

In the meantime, IBM closed yesterday down 50 percent, or $50, from its 52-week high of $100.375. The stock is trading at its lowest level in more than 11 years.

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