Rusty,
I predicted this 3 or 4 months ago....see below for reasoning...great article...
By Franklin Paul
NEW YORK, June 29 (Reuters) - International Business
Machines Corp.'s <IBM.N> strategy for its version of Unix, the
high-powered business software system, would gain a needed
boost if it purchases Sequent Computer Systems Inc.<SQNT.O>,
analysts said on Tuesday.
The Wall Street Journal, quoting a person familiar with the
deal, said IBM was in the "advanced" stage of discussions to
acquire Beaverton, Ore.-based Sequent, a supplier of technology
that allows computers to be strung together to give them
supercomputer-like performance.
IBM and Sequent declined to comment. Nasdaq said Sequent
also declined Nasdaq's request to comment publicly on its stock
activity.
Such an acquisition would help IBM with its stragegy for
Unix servers, Merrill Lynch analyst Steve Milunovich said.
Unix software, while long considered a reliable system for
high-volume business activities such as retail order
processing, has suffered due to the computer industry's
unwillingness to agree on common standards.
But the promise of the new generation of low-cost,
high-power Merced chips, due to ship sometime in 2000, has
enticed computer makers to refocus development efforts on
software based on the Intel Corp. <INTC.O> chips.
By running on Intel chips, Unix-based computers will be
able to compete more effectively on price with Windows NT,
Microsoft Corp.'s <MSFT.O> system, which relies solely on Intel
chips to run powerful systems at low cost.
"(IBM's) RS/6000 series doesn't scale well," Milunovich
said, adding that "Sequent's NUMA architecture could be
helpful."
"IBM needs the technology...as it gets into the Merced
timeframe," said Gary Helmig, analyst with Soundview Technology
Group. He noted that Sequent's systems allow for dynamic
partitioning of the resourcing between NT and Unix.
Milunovich added that buying Sequent might also suggest IBM
is focusing on high-end servers based on Microsoft's Windows
operating systems and Intel's processors.
"IBM does not have large Intel-based or NT-based systems
other than clustering Netfinity PC servers," he said. "Hybrid
servers running both Unix and NT may be popular in the future,
and Sequent is strong here."
Shares of IBM closed up $2.31 at $124.88.
Sequent shares rose to $18.63 a share, its highest level in
the past year, before closing at $17.56, up $3.56.
REUTERS
Rtr 17:51 06-29-99
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