Amdahl Corp has toughened up its earlier warning on its second quarter figures, saying that while it looks for turnover to rise nearly 20%, profits for the period could be 25% to 35% lower than in the same period a year ago, when it reported 48 cents per share earnings, which was a 60% increase on the figure for the previous year. The company blames lower gross margins, primarily because of pricing and volume pressures as the company undergoes the transition to the new 5990 machines. As well as the pricing pressure caused by IBM tearing up its 3090 price lists and inviting customers to make it an offer, Amdahl is also hurting from the higher production costs at this stage in the product cycle, and, of course the effect of the rise in the dollar on translation of foreign business for its accounts. Operating costs are also up on those a year ago because the company has expanded its worldwide sales force and increased research expenditures for the next generation of mainframes. But as deliveries of new storage products reach volume levels and shipments of our largest processors increase, we expect financial results to improve as the year progresses, it says.
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