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Technology Stocks : Amdahl

AMH 31.80

+0.1%

11:54 AM EST

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From: Arthur E. Lemay	5/22/1996 5:09:00 PM
	of 158

I think AMH is a high risk situation. They are moving into businesses that are quite new to them, and not necessarily better margined. Software and systems integration has seen a lot of entrants and exits. I note aerospace, utilities and others who lost a lot of money on just such diversification. All it takes is one bad fixed price deal to get in the hole. And, the mainframe products are at end of life, with a new much lower priced CMOS machine (albeit slower than previous products) due at the end of the year. This is a classic product transition problem. The new announcements about the Intel and NT businesses are wierd to me because AMH's sales force is composed of "suits" who are strictly big ticket guys. Where's the margin in these small systems sales? This is not a cheap channel. Note also that AMH has a deal with Sun to distribute products which compete with Intel/NT. Which one will win out? Maybe the market is responding to the recent CEO change or the excitement of new businesses. Some think AMH is a terrific short sale.

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