Gerstner -- Y2K hangover is history In his annual fireside chat with analysts, IBM's CEO says things are looking up for the second half of 2000 -- 'we're on the right track.'

By Larry Dignan, Inter@ctive Investor May 9, 2000 4:00 PM PT

IBM CEO Lou Gerstner kicked off Big Blue's annual shindig for Wall Street analysts Tuesday with an optimistic outlook. Gerstner said the Y2K hangover is history, the second half is looking good and the company's portfolio restructuring will pay off in upcoming quarters. Gerstner, who presents to Wall Street analysts once a year, covered a wide range of topics, including industry trends, the outlook for business-to-business commerce and the specifics of IBM's vast empire.

The Big Blue chieftain didn't stray from previous guidance of high single digit revenue growth and double-digit earnings growth for the company. IBM (NYSE: IBM), however, will occasionally post double-digit sales growth.

Here's what Gerstner had to say:

On the first quarter and second half outlook, Gerstner reiterated previous guidance and said Year 2000 spending lockdowns hit the company "with a wet fish."

"Y2K continued to hurt us, but that's over now," he said. "We're putting that behind us."

Gerstner added that strategic moves such as selling its network business to AT&T (NYSE: T) hurt revenue. However, the second half should be solid for IBM.

"We expect to produce much better results in the second half," he said. "The fundamentals remain very sound and more than ever I'm convinced we're on the right track."

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http://www.zdnet.com/zdnn/stories/news/0,4586,2566434,00.html

-- Martin Thompson (mthom1927@aol.com), May 09, 2000