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  1. Technology
September 18, 1995


By CBR Staff Writer

Just as the finest, sunniest English summer since records began – in 1659 – broke decisively at the beginning of September, so it looks as if the bull market in US technology stocks has been broken equally decisively by copious evidence that IBM Corp has not really changed at all, and that all the things that were wrong with the company before he arrived have remained untouched by the Loius Gerstner revolution: a chorus of woe from siblings has followed IBM’s string of product delays, with Apple Computer Inc shares taking a tumble as the company warned that its fiscal fourth quarter figures would not meet analysts’ guesstimates; Storage Technology Corp said it sees third quarter results at the low end of financial analysts’ estimates, and while Or acles’s numbers were outstanding, in line with expectations, as one analyst said, management have some lower revenue growth guidance and spooked the market.

France Telecom and Deutsche Telekom AG say they back liberalisation of alternative telecommunications networks before 1998 in a move to win European Community approval for their Atlas joint venture – but the German government has already said the 1996 deadline cannot be met, and the view in Brussels was that the vague commitment was unlikely to satisfy the European Commission; the two also proposed that France Telecom and Deutsche Telekom will compete with each other in selling Atlas services in each other’s markets; they are ready to take any steps to remove any ambiguities over France Telecom’s Info AG German data communications subsidiary; information is being given on the financial relationship between France Telecom, Deutsche Telekom and A tlas to enable the Commission to verify there is no cross-subsidy between them; and the marketing of Atlas international circuits will be done by each of the partners.

As well as warning analysts that they were looking for too much from the current quarter, Apple Computer Inc has stopped shipments of the new PowerBook 5300 portable computer because the lithium ion battery can go bang; it plans to switch to a nickel metal hydride battery.

Philips Electronics NV paid $25m for 855 of a Polish electronics plant as part of its expansion incentral and eastern Europe: the Brabork electronics plant, based in northern Poland, has an annual production capacity of 5m tuners and 500,000 colour television sets.

The Unisource NV four-nation alliance of Swiss, Swedish, Spanish and Dutch telecommunications operators is close to an agreement with a British partner to offer services in the UK, hears the Daily Telegraph: according to the paper, talks are under way with an undisclosed UK company to join forces with Unisource and AT&T Corp to offer data transmission services to corporate customers; the confidential talks are believed to include a company outside the telecommunications business, possibly in the utility sector – but then Energis Communications Ltd fits that bill.

Intel Corp plans to build a major research and manufacturing facility that will ultimately employ up to 5,000 people in the Puget Sound region of Washington State: it will break ground for it in October in DuPont, 50 miles south of Seattle.

Extravagance has still not been squeezed from the IBM Corp system and the company ordered more modems than it needed from San Antonio, Texas-based Data Race Inc: Data Race is unhappy that IBM plans to cancel delivery of substantially all remaining custom modems currently on order with Data Race, cutting the company’s backlog, previously reported to be $5.9 as of June 30, by about $2.5m, but the company is consoled by the fact that cancellation fees on the order almost equal the value of the orders and will significanly mitigate the loss of the business; since the IBM contract has produced the majority of Data Race’s revenue over the past two quarters, the delay would have a substantial impact on the its first quarter revenue.

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Deutsche Telekom AG said it showed a small $10.9m group profit in 1994, swinging from a $2,455m

loss a year earlier, on turnover up 6.5% at $43,641m, saying group net income from ordinary business rose to $3,273m from $1,772m but this was nearly all paid to the government, leaving the small net profit: the state-owned company was reorganised as a joint stock company this year, and plans to offer about 25% of its equity on the market in early 1996; the company cut rates for calls to the US and Scandinavia by 30% in August and says it plans further cuts in rates to other countries including many Asia-Pacific countries where prices will fall by 25% to $1.64 per minute, and calls to Argentina, Saudi Arabia and other countries, to be reduced to $1.96.

Demon Internet Ltd, the London-based Internet access provider is claiming to be the first to offer local call access for 100% of the UK population when its expansion is completed at the end of October: it has also abandoned the terminology of virtual and traditional Points of Presence – which it claims to have coined – due to their widespread use by competitors, in favour of Regionally Organised Modem Pools, or ROMPs; there will be three of these, one for London, one for central England and southern Scotland, and one for southern England and northern Scotland; the ROMPs are not a new technology – just a new way of referring to the old one, the company admitted; Demon’s three telephone capacity providers are British Telecommunications Plc, Energis Communications Ltd and Mercury Communications Ltd.

With the Internet sweeping all before it, General Magic Corp has decided on a change of strategy and will now give away the Magic Cap for Windows version of its operating environment, making it available on the generality of on-line services, in the hope of boosting sales of its Telescript communications scripting language and later selling Magic Cap upgrades and applications: the thinking is that Web merchants and on-line providers will have to install Telescript engines on their servers to enable consumers to use the agent, and will pay to do that only if millions of consumers have Magic Cap on their home personal computers; the company has created two new divisions to further the new strategy, one of them to market Magic Cap, the other to sell Telescript.

Dallas, Texas-based Camelot Corp said DigiPhone, its new software that enables full duplex voice communications over the Internet, began shipping to retail stores on Friday: the company said DigiPhone Deluxe, which contains additional software features such as a Web Browser, electronic mail, File Transfer Protocol and Telnet program, will ship in about two weeks.

BancTec Inc and Recognition International Inc said the Department of Justice is continuing its antitrust review of the proposed acquisition by BancTec of Recognition and the companies said they will supply the Department with the proper documents promptly: the waiting period for the merger may be extended by the Department for up to 20 days from when it gets the documents.

Grown men crying is reserved for Windows95-related stories, but the words IBM Corp and fun go together like bacon and ice cream or fried eggs with sugar lumps, so that it makes one wince to read of the new IBM Family Funpak For OS/2 Warp.

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