IBM Halts Sales of Computres Using Flawed Pentium ProcessorBy Elizabeth Corcoran
The Washington Post
Concern about Intel Corp.'s flawed Pentium microprocessor erupted into an industry brawl Monday when International Business Machines Corp. announced that it would suspend sales of personal computers that use the chip.
IBM contends that people who use Pentium-based computers are more likely to encounter errors than Intel has suggested. Someone running a typical "off-the-shelf" spreadsheet program might get an inaccurate result as frequently as once every 24 days, according to IBM estimates. Intel maintains that the typical Pentium user would only have a problem once in 27,000 years.
IBM's announcement had a dramatic impact on Intel's stock. It dropped $4.25, or about 6 percent, in the space of an hour, leading to a suspension of trading for more than two hours. It gained back some of the loss when trading resumed, closing at $60.37 1/2, down $2.37 1/2.
Monday afternoon, Intel's president, Andy Grove, issued a statement dismissing the IBM results. "You can always contrive situations that force this error," Grove said. "In other words, if you know where a meteor will land, you can go there and get hit."
"If IBM's contention was right, the problem would have shown up thousands of times," Grove said later in a conference call with analysts. "It hasn't."
Some analysts said that IBM has special reasons to criticize the Pentium processor. The company co-developed a competing processor, the PowerPC chip, and has vigorously promoted it as an alternative to Pentium. In addition, IBM does a relatively small business in Pentium-based PCs, accounting for only about 100,000 of 4 million Pentium computers sold.
IBM remains alone among the big companies in suspending sales (it said it would resume them when the chips were corrected). Gateway 2000 Inc., Dell Computer Corp. and Compaq Computer Corp. said they will continue to ship Pentium machines.
"Before all of this hit the press, we had not had one single call about this anomaly occurring, and we sell more Pentium computers than anyone else" in the United States," said Wendell Watson, spokesman for Gateway 2000 of North Sioux City, South Dakota.