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Technology Stocks : INTC

INTC 40.56

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12:59 PM EST

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To: Road Walker who wrote (330)	4/23/1997 11:34:00 PM
From: Harry Landsiedel	of 990

Re: IBM earnings. I read through the PR release on earnings. In many ways it was a continuation of 4Q trends. On the plus side revenue was better overall (+9%) on a constant dollar basis. However, hardware revenue growth was flat and margins were down. They are trading revenue dollars from proprietary products with higher margins for Wintel products with lower margins. Long term that has to be a losing proposition, unless you're the low cost provider and IBM is far from that. Big gain in services but as Jules pointed out last time that too is a lower margin business. On the plus side these contracts are big bucks and multi-year. They must be virtual annuities. The huge number of shares bought back helped prop up the price, but they only have $800 million left to spend, so they can't keep that up. I did not see any comments about the upcoming quarter. They were bullish on revenue in the 4Q announcement. Did you see anything? HL

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