IBM Tie Could Help Citicorp Sell Quotron
The operating agreement announced on Thursday between IBM Corp. and Citicorp may make it easier for the bank to sell its troubled Quotron unit, observers said.
"IBM's involvement gives them more credibility," said a Quotron competitor.
A Shift in Plans
Quotron has not made money since Citicorp purchased it for $680 million in 1986.
Until recently, the bank said it had no plans to sell the unit, although it had quietly shopped Quotron around earlier this year.
But last quarter it took a sizable writedown on its information division, of which Quotron is the biggest part.
Analysts saw that write-off as a prelude to a possible sale.
Under the terms of the five-year deal, Quotron will use IBM computers as the backbone of its stock-quote service.
In addition, IBM will provide the technical support for its computers.
Quotron's customers had complained that the company was not providing adequate support.
Competitors Have IBM Link
Quotron's main rivals in the stock-quote business already have a similar deal with IBM, so it is unclear that the new arrangement will help Quotron shore up its slipping market share.
The Citicorp unit said the IBM deal would enable it to cut costs, but it would not estimate those savings.