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Technology Stocks : IBM -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (5769)	10/21/1999 6:28:00 PM
From: Arrow Hd.	Read Replies (2) \| Respond to of 8218

Sam, I don't quite understand the comment that big iron is a drag on IBM's earnings. Due to price attrition and the fact that other business areas such as services have had tremendous growth it is not as dominant as in the 70s and 80s but big iron margins are second only to legacy software and are certainly not a drag. PCs may be a drag. Certainly networking hardware has been problematic and the Sun example you are discussing with Ravi points out holes in the Risc business but there is nothing anywhere that matches the flagship iron of AS/400 and S/390. The revenue drag one new mainframe system creates is enormous. Surrounding that new machine/type/serial number is a new license of OS/390, new services contracts, eventually after warranty a new hardware maintenance agreement, other software licenses for stuff like communications and database, new applications, industry oriented services, a term lease master agreement contract from the IBM Credit Corp so IBM not only gets period purchase revenue but then under assignment of sale a new annuity revenue stream for the next three years all financed at the best rates going and none of it happened until this piece of old tired iron got installed. I would not view that business area as a drag. If it was not important the data center freeze issue would be a non-event.