Rather exposing the Wall Street analysts that have been insisting that the only way for IBM Corp is onward and upward, the US edition of the Wall Street Journal on Friday ran a lengthy piece pointing out how IBM is benefitting largely from the fact that it forecast that demand for big mainframes will tail off even faster than it has, pointing out that the CMOS machines are going nowhere near as well, and are being rejected by mainframe-wedded companies for the forthcoming Hitachi machines because IBM’s monolithic top end is no longer big enough, and highlighting the structural and market weaknesses of all IBM’s other systems businesses apart from the AS/400; it also suggests that in his recent utterances, chairman Lou Gerstner appears to have become infected with the endemic IBM hubris, and that where until this year he was extremely cautious and downbeat in his utterances, he is now as chirpy as John Akers at his most over-optimistic; the piece even repeats our cruellest jibe, that IBM looks set to become as successful as Unisys Corp.
The piece had a moderate effect on the market, and IBM Corp shares led it down in Friday morning trading, shedding $1.50 by noon at $94.50.
Boulder, Colorado-based Integral Peripherals Inc, one of the pioneers of 1.8 disk drives, a market that appears increasingly to be faltering, will start producing 2.5 disk drives: it and Samsung Electronics Co Ltd are working together to design a low-profile, 2.5 disk drive that will pack 1Gb, using conventional technology, and the drive goes into production in July; Integral Peripherals denies it is branching out due to disappointing 1.8 sales and says the 2.5 venture results from demands by two notebook computer makers, one in Japan, the other in the US.
The European Commission on Friday approved the creation of the telecommunications joint venture in Sweden by British Telecommunications Plc, TeleDanmark A/S and Telenor A/S: the new venture, provisionally called TBT Communication AB, will combine the existing telecommunications service activities of the three parents for both residential and corporate customers, acting both as a network operator and service provider; the market share acquired by new entrants to the Swedish market has been relatively small, with none having a market share exceeding 5.0% for either speech or data services.
Oracle Corp shares were rising in active trading at the end of last week on speculation that it could be positioning itself for a large takeover, possibly of Lotus Development Corp; separately, Novell Inc denied talk that it planned to buy Lotus, saying it was focusing on strategies to fight Microsoft Corp; Oracle chief executive Larry Ellison was quoted as describing buying Lotus as an interesting scenario.
Amstrad Plc, whose shares have been jumping about on talk that it has some hot new products in the works, denied the talk that it was to launch a new product soon, and declined to comment on market gossip that its Danish subsidiary had won a large order: the shares were up 2.5 pence at 198 pence on Friday.
Hutchison Telecommunications UK Ltd’s Orange Personal Communications Network says it plans to extend the number of base stations around which its core network is built to 3,000 from the current 1,500 over the next two years: its original plans were for the completed network to use 2,000 base stations; the additional stations will are to avoid the problem of call congestion and take its coverage above 90% of the UK population from 75% now.
The Spanish government has decided to sell a 12% stake in its 32%-owned Telefonica de Espana SA: it is retaining almost 20% on grounds that the government must retain some real control until Telefonica is ready for the total liberalisation of the sector set for 1998; the sale should be by the year-end.
The gossip proved to be good (CI No 2,618): Amadeus Global Travel Distribution SA is to take over the System One air reservation system from Continental Airlines in return for a 12.4% stake in
Amadeus and an undisclosed cash sum: the combination of Amadeus’s existing network with System One would result in a single network that serves 33,000 travel agencies; Electronic Data Systems Corp will continue to manage Houston-based System Onc.
Intel Corp is splitting its shares two-for-one and raised the dividend by a third: its shares rose $1 to $100.625 before the announcement.
Computer Sciences Corp has a memorandum of understanding with Anglian Water Plc to conclude a facilities management agreement that would be worth up to $300m over 10 years.
Hewlett-Packard Co’s timely announcement of the manufacturing glitch affecting some PA-7100 and PA-7150 microprocessors is being seen as a reflection of the furore that engulfed Intel Corp over the Pentium flaw: the company asserts that the problem was a manufacturing snag and that there is nothing wrong with the design of the microprocessors, adding that the flaw, which in conjunction with specific configurations of memory, instructions and data, could trigger a high-priority machine check that causes an error message, shuts down the computer so it needs rebooting, had been reported by two users, and that while it could corrupt files, no such problems had been reported.
Gateway 2000 Inc says that component shortages experienced in the first quarter have continued into the second quarter, and that they are expected to constrain revenue and earnings further this quarter; the most severe shortage is of four-times speed CD-ROM drives.
America Online Inc is in talks to buy Internet consulting and software company WAIS Inc, the trade magazine Interactive Age reported, saying the move would enhance its ability to help information providers to get on the World Wide Web.
Cyrix Corp chief executive Jerry Rogers told the annual meeting the company is working to get its M1 microprocessor into high-volume production in the third and fourth quarters of this year: We believe that our M1 product competes favourably with the Pentium and P6.
Reuters Holdings Plc reports that first quarter turnover rose by 22% to รบ628m and excluding acquisitions, growth in the first quarter was 16%; currency movements had no impact on Reuters’ overall revenue.
For its last period before becoming part of Micron Electronics Inc, Zeos International Ltd saw first quarter net of $2.6m, against an $8.6m loss; sales rose 68% at $83m.
Just the normal give-and-take of merger partners haggling about terms says William Neukom, Microsoft Corp’s general counsel airily of documents cited in the Justice Department suit that show that Microsoft told Intuit Inc that it could do a lot if it invested $1,000m in Money instead of going ahead with a takeover, and an internal memo from a senior Microsoft executive that appears to acknowledge that no other company could compete against a Microsoft-Intuit Inc combination – If it was known that we were buying Intuit’s offerings… then I can’t imagine anyone would be stupid enough to buy Money from Microsoft – shows what the company thinks of Novell Inc.
