IBM Corp’s shares continued their upward march, topping $110 for the first time in four years yesterday, and technical analysts said they expect the stock to keep climbing.
Unisys Corp, Loral Corp and British company Granger Telecom Ltd plan to market fixed wireless telephone service in areas of the world so far untouched by telecommunications: the partners will use that spread spectrum communications technology originally developed by Unisys for military use, and Unisys and Loral will jointly develop and own the technology and products, while Granger has been taken aboard to market the products in Europe, Asia, Africa and Latin America – the privately-owned company specialises in offering telecommunications services in the developed world by subcontracting to existing service providers in those countries; Unisys says that $4m of start-up capital is involved, and the first services will be rolled out in limited areas from first quarter 1996; by using the radio technology the companies say they will be able to connect customers to the phone network who are up to 19 miles from existing phone cables; connection will be via a small radio unit on the side of the subscriber’s home.
Commenting on its figures (page seven) Amdahl Corp president and chief executive Joseph Zemke said second quarter mainframe margins were better than expected because of the large number of upgrades and reduced manufacturing costs, but the company did less well in the second quarter than the first, suggesting monolithic mainframe demand is beginning to fall off.
Newton, Massachusetts-based manufacturing software specialist Marcam Corp says that while it currently has no borrowings under its revolving credit facility, it is in default of some of its covenants, and is negotiating with the banks on the availability of credit, adding that it expects that it will need access to its credit facility during the current quarter; it lost $2.9m in the third quarter to June.
Viacom Inc is selling its cable television systems to Tele-Communications Inc in a two-step transaction involving a spin-off of the cable systems to Viacom shareholders: the transaction will reduce its $10,000m or so of debt by $1,700m and values the cable systems with their 1.2m customers at more than $2,250m; the deal is likely to be closed in early 1996.
Packard Bell Electronics Inc, now in Sacramento, has chosen H&R Block Inc’s Compuserve as an exclusive direct Internet access provider for its users to access the worldwide network at the touch of a button: Packard Bell is pre-loading Navigator software immediately with allthe computers it sells worldwide.
Shares in Siebe Plc rose 10 pence to 668 pence yesterday following trading comment at the annual general meeting: managing director and chief executive Allen Yarko told shareholders that solid growth in both new orders and sales continued in the first quarter, and that growth rates in the temperature and appliance controls division moderated in the automotive, appliance and air conditioning markets in North America, but outstanding growth continues in Europe, South America and the Far East; Siebe control systems have continued to see accelerating demand from the capital goods markets throughout the world, most notably in North America, the Middle and Far East.
Commenting on its figures (page seven) Northern Telecom Ltd says second quarter turnover and profit were in line with expectations: quarterly revenues showed international growth over 1994, with substantial gains in Europe supported by solid year over year increases in its Wireless, Switching and Enterprise Network businesses, but its North American market revenues for the quarter grew only modestly.
AirTouch Communications Inc is to take a 4.5% stake in Digital TU-KA Hokkaido Co Ltd, a new company being formed to provide cellular service on the northern Japanese island of Hokkaido: Sapporo City-based Digital TU-KA plans to build a 1.5GHz system that will use the Japanese Digital Cellular technical sta
ndard; it has 41 shareholders with the largest two being Japan Telecom and Nissan Motor Co Ltd, each of which will have a 23% stake; other major partners are Hitachi Ltd and Hokkaido Railway Co, each with 5.5%, Nippon Steel Corp and Toyota Motor Corp each with 5%; GTE Corp’s GTE Mobile Communications International is the other American in there, with 4.5%.
IBM Corp’s board authorised repurchase of up to an additional $2,500m of the company’s common shares: IBM plans to buy on the open market from time to time, depending on market conditions.
You do realise that although there were plans to replace the Federal Aviation Administration’s en route air traffic control computers with – now decidedly dated – IBM Corp 3081s, many of the machines that keep you in the air when you fly across the US are still antique IBM 9020Ds: the 9020D is a 360/65 front-ended by 360/50s, and the things have now been in service for 25 years – and one of them just died: engineers needed about 21 hours to restart the computer at the Chicago Air Route Traffic Control Centre in suburban Aurora, the busiest of 20 en route radar posts US-wide, which monitor flights in transit, not landings or takeoffs; the breakdown was the third and by far the longest in the past week at the centre, requiring controllers to use a back-up system that does not automatically alert them when aircraft fly too close together; the previous breakdowns of the IBM system were on July 18, when the computer suffered an unexplained shutdown during the evening rush hour for two hours and a back-up system was activated, and on Sunday afternoon, when the system slowed in updating information on cont rollers’ screens and the back-up system was used for about 20 minutes; the new computer system is scheduled to be installed at the centre in 1998, a delay attributed to the system’s complicated design and strict federal procurement policies – but unless the plans have changed, the machine that goes in then will already be 17 years old.
Greek state phone company OTE’s OME-OTE trades union says it opposes management’s move to ask the board of directors to pick a financial advisor for the company’s planned part flotation on the Athens stock exchange later this year; OME-OTE said management plans for a small flotation undermined OTE’s modernisation as they torpedoed labour relations with the union – We will try to prevent such plans from happening relying on the strength of OTE’s 26,000 employees, the Luddites said menacingly.
Stratus Computer Inc says As we expected at the start of the quarter, product transition issues caused a small decline in revenue from quarter two of last year, adding hat there was an unexpected and more pronounced shift to the lower end of the product line, hitting margins and earnings; figures, p7.
One of the most interesting of the large crop of technology companies newly floated in London is pharmaceutical software company Oxford Molecular Group Plc, which has been chatting with Reuters, telling the news wire it is operating in the black for the first time since it was founded in 1989, that it will make an operating profit of ú1m next year, and expects to announce more strategic alliances this year: the computer-aided molecular design software developer lost a pre-tax ú2.9m last year on sales of 2.8m and expects to lose ú2m this year, but it says revenues will accelerate this year to ú8.7m and to just over ú11m in 1996 – We want to be the Microsoft of drug design, chief executive Tony Marchington told Reuters – We apply very, very clever science in a useful way for our customers that is very low risk for ourselves, and very high profit to ourselves – we are integrators, he said, going on, We are drawing on a world-wide network of about 150 academic laborato ries from the US, Europe and Japan; we integrate the research coming from academia with the requirements of our customers, the pharmaceutical companies; Marchington reckons that the world market for his companies drug design services is worth around ú10
0m and its share is heading for 10%; This market will expand to about ú1,000m in the next five years, and we expect to win 25 to 30% of that, Marchington said – By linking universities with our computer software we have a vast virtual pharamaceutical research team… We ask big drug companies what they want, then go to academics around the world to see what they are doing; we manage the research teams; we don’t need massive investment of management cost, there’s huge potential, he added.
Dell Computer Corp chairman Michael Dell is eager to sell more personal computers in the fast-growing consumer market but plans to enter the sector gradually, he said after the company’s annual meeting; Dell, who founded the company 10 years ago – as PC’s Ltd, remember? – said the company will probably target people who are second-time buyers, ones that tend to be more knowledgeable about computer products.
Hughes Electronics Corp has been signed up to build 12 satellites for the Inmarsat-P global mobile telephone system in a deal valued at more than $1,300m: the first satellite will be launched in 1998 and service will begin in 1999 with six operational satellites; the General Motors Corp unit will also become a strategic partner with an Inmarsat-P affiliate; the production phase of the programme will require a build rate as high as one satellite per month but trouble looms because TRW Inc believes that the Inmarsat-P plans infringe the patent it has just been awarded.
