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May 5, 1988

WALL STREET REACTIONS ON THE AMDAHL ANNOUNCEMENT

By CBR Staff Writer

Wall Street was not as quick as usual to read the message of the Amdahl Corp mainframe announcement and initially marked Amdahl’s shares down – no doubt on the sell on a strike principle that is time-honoured in the mining and oil industries – and IBM’s shares up (CI No 921): on Wednesday, after more consideration, those trends were reversed, and Amdahl jumped $1.875 to $42.25 while IBM shed $1.375 to $113.25; in fact, although IBM presumably knew all about Amdahl’s plans months ago, the new 5990 and disks do pose a significant threat to IBM’s bottom line, because while they won’t necessarily cost IBM business it might otherwise have won, they will force IBM to offer wavering customers even bigger discounts on the list price in order to keep them loyal.

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