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ARMONK, N.Y. -- IBM announced yesterday that it would supply mainframe computer and microchip technology to Hitachi Ltd., a longtime rival in the market for large computers.With profits shrinking fast in the mainframe business, the landmark deal is an acknowledgment by both companies that they must cooperate to reduce costs."Changing times make strange bedfellows," said John Staedke, president of Hitachi Data Systems in Santa Clara, Calif., the U.S. computer-making subsidiary of the Japanese corporation.

In their first face-to-face conversation since IBM began its hostile takeover bid for Lotus Development Corp., the heads of the two companies met yesterday in New York City, according to an executive familiar with the meeting.While the meeting was described as merely exploratory on the part of Lotus' chairman and chief executive, Jim P. Manzi, it is expected to continue today and is the first indication that Lotus is at least willing to hear IBM's case for acquiring the software company through a $60-a-share tender offer.

IBM took a significant step yesterday toward opening its product line so that it could work more closely with its competitors, announcing seven new mainframes and more than 100 hardware add-ons and software programs.The company also said the powerful water-cooled mainframes it announced a year ago would begin shipping next week. It said these mainframes had top speeds 15 percent faster than IBM had been projecting.Analysts gave International Business Machines Corp. high marks for its new-found openness, which includes a version of the Unix operating system for its mainframe machines and a strategy called the Information Warehouse, which is designed to ease the process of sharing information stored in a variety of formats.

Kaleida Labs Inc., Motorola Inc. and Scientific-Atlanta Inc. said yesterday that they had agreed to jointly develop software and hardware for the delivery of interactive and multimedia services to homes through cable television networks.The new alliance would pose a challenge to Intel Corp., Microsoft Corp. and General Instrument Corp., which earlier this spring announced an alliance to develop a set-top device.Under the agreement, Kaleida -- a joint venture of Apple Computer Inc. and IBM -- would supply its multimedia software, ScriptX, for use in set-top devices and network equipment.

History shows that bigger armies don't always win battles. The French lost at Agincourt, as did Napoleon at Waterloo.And mighty IBM, with its army of about 300,000 employees, is expected to lose a fight with Microsoft's 12,000 employees over who controls the direction of personal computing.IBM is mobilizing employees to push its new operating-system software, OS/2 version 2, but big sales forces can't force anyone to buy it. The software will have a suggested retail price of $195.The IBM program will compete with Microsoft's Windows, the $150 complement to Microsoft's MS-DOS.

NEW YORK -- Stock prices closed lower yesterday after International Business Machines Corp. reported the biggest loss in its 79-year history.In contrast to IBM, several large banks, including Citicorp, reported strong fourth-quarter results, starting a stampede into bank stocks.The Dow Jones industrial average fell 18.92, to 3255.99, led by declines in Goodyear Tire & Rubber,IBM, Coca-Cola and Philip Morris Cos. The index recovered from an early slump, only to tumble again toward the end of the session.

SAN FRANCISCO -- Apple Computer Inc. and IBM formally announced yesterday their plan to build a personal computer that will run either company's software. But many experts remained skeptical about the companies' chances of dominating the computer industry unless they also eventually agreed to pursue a single software strategy."They actually need the same software on every machine," said Phil Lemmons, editor in chief of PC World magazine, a trade publication.Mr. Lemmons noted that Apple continued to promote its Macintosh software, while IBM remained intent on pursuing its own OS/2 software, with each company's executives criticizing the other's approach.

A three-judge appellate panel ruled yesterday that IBM did not discriminate against its older workers when it switched retirement plans in 1999, a long-awaited decision that could help shelter hundreds of companies from possible age-discrimination suits. The decision reversed a 2003 federal court ruling that changes International Business Machines made to its pension plan discriminated against older workers by making it impossible for their benefits to grow in value as much as the benefits of younger workers.

NEW YORK -- A $5 billion loss, massive staffing cutbacks and a plummeting stock price meant a pay cut last year for IBM boss John F. Akers -- from $1.57 million to $1.3 million.The modest 17 percent cut was disclosed yesterday in International Business Machines Corp.'s 1992 proxy, which showed that the outgoing chief executive officer's base salary stayed at $925,000, while his bonus was cut to $375,000 last year from $650,000 in 1991, when the company lost $2 billion.Although Mr. Akers is due to leave shortly, he was renominated by the computer maker to serve on the board of directors for a 10th year.

Westinghouse Electric Corp. and International Business Machines Corp., two of the nation's largest companies, said today that they lost money in 1991. Neither report was a surprise, because the companies have announced corporate restructurings, including layoffs in Maryland.Westinghouse Chairman Paul E. Lego blamed the loss on its troubled financial services unit.In 1991, Westinghouse lost $1.09 billion, or $3.46 a share, on revenues of $12.8 billion. In 1990, the company had a $268 million profit, or 91 cents per share, on revenues of $12.9 billion.