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

To: J R KARY who wrote (2660)	3/19/1998 4:47:00 AM
From: Toby	Respond to of 8218

IBM's new foundry strategy makes outstanding business sense and further illustrates how IBM is determined to milk more money out of it's R&D and technology investments. Imagine, IBM has the industry leading Si technology, but is perhaps only the 8th largest manufacturer of Si chips in the world. Only recently have the even begun OEM delivery. Foundry resembles IBM's wildly successful storage strategy. Leverage industry best technology to dominate the attractive high end marketplace and leave the previous industry leaders to slug it out in the commodity arena. In Si, this means IBM can charge attractive margins for access to .18um Cu technology whereas the Taiwanese fabs can only offer .25-.3um conventional foundry services. IBM gets more revenues, some of which can be used to keep R&D vital and maintain its lead vs Intel and the rest. This is my kind of service business.

To: J R KARY who wrote (2660)	3/19/1998 8:43:00 AM
From: Chris	Read Replies (1) \| Respond to of 8218

From Briefing.com: Computer Systems & Peripherals Brief: IBM has been noticeably absent from the market's rally to new high ground, as the stock has spent the past few months hovering in the 100 area... The reasons are simple... Unlike Dell, IBM can't seem to grow its hardware business by more than a few percentage points... This is particularly troublesome given that hardware margins exceed those on the service side... Adding to the problem is that hardware margins are likely to erode due to an increasingly competitive marketplace... Avoid the temptation to jump on big blue simply because it has lagged the market - it deserves to... CEMs got creamed in response to Jabil's cautionary comments regarding the second half of the year, with JBIL shedding nearly 5 points and SCI Systems more than 3.