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To: Barry Grossman who wrote (20159)	5/12/1999 10:52:00 PM
From: MileHigh	Read Replies (3) \| Respond to of 93625

IBM is out of the DRAM business, see below. So much for my theory.. Wednesday May 12, 10:11 pm Eastern Time IBM CEO upbeat on double-digit revenue growth By Eric Auchard NEW YORK, May 12 (Reuters) - International Business Machines Corp. (IBM - news) Chairman and Chief Executive Louis Gerstner on Wednesday said the company remains on track for sustained revenue growth in the double digits -- 10 percent or better. Financial analysts and fund managers attending IBM's annual briefing for Wall Street here left a presentation by Gerstner saying they were confident the computer maker was firing on all growth cylinders. ''The presentation was very upbeat,'' said John Johnson, a money manager with Berger Funds in Denver, as he left the IBM event. Gerstner encouraged attendees to extrapolate from IBM's momentum over the last seven quarters, noting that the company had averaged 7 percent growth early in this period and 9 percent growth over the last three quarters. He instructed analysts to ''do the math'' to see that revenue growth of at least 10 percent was within IBM's grasp, said Nancy Denin, a fund manager with Legg Mason in Baltimore. Analysts and money managers said Gerstner reiterated his commitment to remain in the personal computer business, despite its lack of profits, but vowed to exit the computer memory chip business. Gerstner made clear the company was evaluating closely the strategic purposes and financial returns of staying in the boom-and-bust memory chip business, which has sapped IBM profitability in recent years. Asked if IBM would be in that business five years from now, Gerstner said it was highly possible that IBM would have a negligible or even nonexistent memory chip operation. ''He's out of D-RAM,'' Johnson said, referring to the computer industry jargon for computer memory chips known as Dynamic Random Access Memory. Instead, the top IBM executive said the company would continue to shift its manufacturing capacity to production of highly profitable custom logic chips, of which it is the world's No. 2 supplier. He said IBM's PC unit's bottom line was improving but gave no timeframe for a return to profitability. He noted that the $1 billion loss in 1998 at the PC business was largely tied to accounting issues and the allocation of costs from other businesses. He said the PC business doesn't receive many of the services and software revenues it helps to generate, while shouldering marketing costs and other companywide expenses. IBM Spokesman John Bukovinsky later confirmed Gerstner's comments on double-digit revenue growth, the IBM PC business and its desire to exit the computer memory chip business. In his remarks, Gerstner took issue with the explosive valuations assigned to Internet stocks and argued that 60 percent of the huge amount of spending expected on e-busineses was estimated to come from computer services work, with the remainder from hardware and software. IBM is the world's No. 1 supplier of computer consulting and technical services, with nearly double the revenues of its closest competitor.

To: Barry Grossman who wrote (20159)	5/12/1999 10:58:00 PM
From: MileHigh	Read Replies (1) \| Respond to of 93625

Notice comments on graphics chip company (?) Wednesday May 12, 10:29 pm Eastern Time Nintendo's new video game system to feature IBM brain (Updates with Nintendo exec quotes, grafs 4, 17, 18, analyst comment graf 6) By Scott Hillis LOS ANGELES, May 12 (Reuters) - Japan's Nintendo Co. on Wednesday said it has enlisted International Business Machines Corp. to make a powerful new chip for its next-generation game system in a $1 billion deal that heats up the race for dominance in the video game market. Under the agreement, to be implemented over several years, computer giant IBM (IBM - news) is to design and manufacture the ''Gekko,'' a 400-megahertz custom version of its PowerPC microprocessor. Nintendo said its next-generation gaming console, dubbed the ''Dolphin,'' will hit the market in time for the 2000 holiday season and would boast the fastest and most realistic action yet in an industry where blistering speed is everything. ''In a nutshell, Dolphin hardware and software will be fast, powerful and inexpensive,'' Howard Lincoln, chairman of Nintendo America, told a news briefing. Analysts said the announcement puts Nintendo firmly back in the race with rivals Sony Corp. and Sega Enterprises Ltd. , which are both loudly touting the speed and performance of their upcoming next-generation machines. ''It makes it very interesting now that all three of them are in there,'' said Jeremy Schwartz, a senior analyst with Forrester Research in Cambridge, Mass. ''Everybody had been wondering what they (Nintendo) were up to.'' For IBM, the deal is a chance to show off its latest microprocessor technology that uses smaller, copper wiring that is more efficient than traditional aluminum connections. It marks a branching out of the PowerPC chip -- best known as the brains of Apple Computer Inc. (AAPL - news) computers -- into high-powered gaming devices. News of the deal helped send IBM stock to $225.125, up $4 on Wednesday. The chip will be paired with a special graphics processor designed by ArtX, a Silicon Valley computer chip designer that has set the de facto standard for realistic graphics in the gaming industry. The Dolphin will succeed the Nintendo 64 console. Nintendo 64 hardware and software held a 28 percent slice of the $5 billion 1998 U.S. video game market. That trailed the Sony PlayStation's 54 percent, according to research firm PC Data. Intent on keeping its market lead, Sony says it will launch its PlayStation II next year, powered by a custom Toshiba processor. Third-place Sega, seeking to regain its once-lofty perch in the market, is set to beat its rivals to the punch by launching its Dreamcast machine in September, backing it with a $100 million marketing blitz. Both Sega and Sony will feature chips capable of processing up to 128 bits of data at the same time, double the current 64-bit machines. It was unclear if Nintendo's new chip would offer 128-bit performance. Hoping to gain a competitive edge, the companies are packing the devices with new features. For instance, Sega's Dreamcast will be able to connect to the Internet. Earlier in Tokyo on Wednesday, Nintendo and Matsushita Electric Industrial said they had struck a deal in which Matsushita will make a digital versatile disc (DVD) player through its Panasonic brand for the machines. Lincoln said the partnership with Matsushita also would lead to other consumer devices using the Dolphin technology. But he declined to reveal details, saying only that it would bolster Nintendo in its fight with Sony and Sega. ''I'm quite confident we will do quite well in the coming battle. In fact, I can hardly wait,'' Lincoln said.