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To: JRI who wrote (35278)	10/23/1998 1:59:00 PM
From: John Koligman	Read Replies (1) \| Respond to of 97611

More on the competition, IBM is expected to introduce a $599 PC with a 300mhz IBM built chip for the Xmas season... John IBM Plans to Unveil Aptiva For $599 by Late November By a WALL STREET JOURNAL Staff Reporter ARMONK, N.Y. -- International Business Machines Corp. is getting ready to unveil a $599 personal computer, a pre-emptive strike to position its Aptiva brand at the low end of the sub-$1,000 market for home computers. IBM, which came late to the sub-$1,000 market and lost significant opportunity to boost its Aptiva sales, plans to start selling the new model in late November with an eye to the coming holiday shopping season. The new Aptiva D1N comes with a 300-megahertz IBM processor chip, based on a design from National Semiconductor Corp.'s Cyrix unit, and a 3.2-gigabyte hard disk drive. Customers will have to pay extra for a monitor. While IBM isn't the first company to start selling powerful PCs for under $600, it is the first major brand to enter the segment. Compaq Computer Corp. is selling its new Presario 2266 for $799, though customers who sign up for Compaq's Internet service get a $100 rebate. IBM's least-expensive Aptiva currently sells for $799. IBM's early move to tap into a new sub-$600 market suggests the computer giant continues to believe in its chances in the hotly contested consumer-PC business. Third-quarter industry data, which are expected to come out next week, are likely to show that the Aptiva brand is picking up some market share, albeit off a small base, industry executives said. The new Aptiva, code-named Key West, is being manufactured for IBM in Taiwan and other low-cost markets by third parties.

To: JRI who wrote (35278)	10/23/1998 2:14:00 PM
From: John Koligman	Read Replies (1) \| Respond to of 97611

John, here's a bit more on what Gerstner said from Dow Jones... John IBM's Gerstner: PC Industry Moving To New Phase Dow Jones Newswires NEW YORK -- International Business Machines Corp. (IBM) Chairman and Chief Executive Louis V. Gerstner said the PC industry, although strong, is moving to a new phase called "network computing or e-business." "The era of the PC is over," Gerstner said in an interview with Maria Bartiromo on CNBC Thursday. "This preoccupation we've had with providing computer capability to the desktop is over." Gerstner said IBM's biggest opportunity and one that is starting to drive the company's growth "is to bring our customers to this network world. To show them and then deliver this promise we have of reaching out to our customers, increasing their globalization that they have." In discussing IBM's above-expectation third-quarter results, Gerstner said IBM's services unit as the fastest growing part of its business. Computer services have grown in importance because of technology's complexity, he said. "We have to do all the integration. It's like buying a car; you have to buy the wheels, the steering wheel, the engine, and you have to put it all together. So the customer is saying today, "we want solutions," Gerstner said. Tuesday after the close, IBM reported above expectation third-quarter earnings of $1.56 a share, up 16% from the $1.35 a share it earned a year ago, and above Wall Street's consensus expectation of $1.53 a share. Revenue increased 8% to $20 billion from $18.6 billion a year ago. Gerstner said IBM's third-quarter "was strong across the board. We had strong business in our hardware, terrific continuation in our growth in services, software was strong, PCs returned from a very difficult first half." IBM's problem areas during the quarter were in microelectronics and the Asia Pacific region, he said. Gerstner said in response to a question about grooming a successor that the decision would be up to the board. He added the company is satified with its "nice low undervalued multiple" because the high ones mean that there is "no place to go but down.