STOCKREPORTS

Amdahl Corporation

ASE Symbol AMH In S&P 500

Recent Price 10.00 52 Wk Range 13.63 - 8.31

Yield Nil 12-Mo. P/E NM

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 2- Fair Value 9.00 Risk MEDIUM Earn/Div Rank C
Technical Evaluation: BEARISH since 10/96 Rel. Strength Rank (1 Lowest - 99 Highest) 54 Insider Activity NA

Overview 02-JUL-97

We are forecasting a nearly 20% revenue increase in 1997, as AMH benefits from greater exposure to the fast-growing consulting and professional services markets and a completely refreshed hardware product line. In 1996, Amdahl introduced: its new Millennium series of CMOS-powered mainframes; its Spectris and LVS series of storage products; and EnVista, a family of mid-range servers based on Intel's Pentium Pro Quad architecture and Microsoft Windows NT. Hardware revenue growth should benefit primarily from easier year to year comparisons; while service, software and other revenues are expected to grow about 20%, benefiting from the acquisitions of TRECOM and DMR, and strong industry conditions. Gross margins should expand slightly, helped somewhat by the higher-margin Windows NT Servers, and operating expenses should decline, benefitting from recent initiatives to "right size" the company.

Valuation 02-JUL-97

The shares have retreated from highs achieved in December 1996 and are down 20% since the end of the year. While we view positively AMH's efforts to transition itself into a services-led solutions provider, we remain cautious about the ultimate acceptance of new CMOS mainframes and RAID storage products. We continue to view these markets as extremely competitive, and question whether AMH can ultimately compete in them on a consistent basis. This uncertainty and a current valuation based on our $0.70 estimate for 1998 are the basis for our current neutral opinion. As a result, we would defer adding to positions until there is evidence that new products are finding customer acceptance.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Dividend Data: Cash dividends, initiated in 1977, were suspended following the August 1993 payment.

Business Summary 02-JUL-97

Amdahl's large-scale computers and related storage products are software and hardware compatible with those of IBM. Addressing the paradigm shift away from proprietary mainframes to client/server computing, AMH also offers open client-server computer and storage systems, software and services.

AMH revenues are primarily divided between processor equipment (accounting for 22% of revenues in 1996), maintenance services (27%) and consulting and professional services (34%). This reflects a shift from its prior revenue mix which emphasized processor equipment (42% of 1995 revenues), and maintenance services (31%), while consulting and professional services were previously less than 10% of revenues. Like IBM, the mix shift represents an industry-wide decline in maintenance compared with the fast growth of services.

AMH's 5995 series of mainframes competes with IBM's ES9000 series. AMH also makes high performance direct access storage devices (DASD) and controllers for use with large-scale computers, and resells mid-range and larger data servers made by Sun Microsystems. Alternatively, AMH obtains components and subassemblies for its computer systems from Fujitsu Ltd, which owns 43% of AMH shares.

AMH has recently refreshed its product line. AMH began shipping, late in 1996, its CMOS-based System 390 Servers, called Millenium--mainframe manufacturers are transitioning to CMOS-based systems, from traditional bipolar systems, because they are less expensive to operate. In 1996, AMH also introduced its RAID (Redundant Arrays of Inexpensive Disks) storage system, called Spectris, and EnVista, a family of mid-range servers based on the popular combo of Intel's Pentium Pro Quad architecture and Microsoft Windows NT. For large scale users, AMH also introduced the advanced Logical Volume Series 4500 Storage System.

Amdahl's growth in consulting and services has benefited from two acquisitions: in April 1996, AMH acquired TRECOM Business Systems, Inc., an information technology service provider; and acquired Canada-based DMR Group, a leading provider of information technology services in 1995.

AMH's software products include management software for client-server networks; Huron ObjectStar for application development and business process reengineering; and UTS, a UNIX-based proprietary operating system that runs on IBM, Hitachi and AMH mainframes.

Earlier this year AMH took a $40 million restructuring charge to "right-size" its operating infrastructure as part of its strategy to transition into a more service/software oriented company, and plans to add to its workforce in this area.

Capitalization

Long Term Debt: $41,903,000 (3/28/97).

Curr. Ratio	1.3	2.2	2.0	1.5	1.9	2.4	2.3	2.0	2.2	2.2
% LT Debt of Cap.	6.1	11.8	9.7	2.3	12.6	6.5	1.6	6.2	7.6	10.1
% Net Inc.of Revs.	NM	1.9	4.6	NM	NM	0.3	8.5	7.3	11.9	9.4
% Ret. on Assets	NM	1.7	4.4	NM	NM	0.2	8.0	7.3	12.4	10.7
% Ret. on Equity	NM	3.2	8.9	NM	NM	0.3	14.4	13.8	23.9	21.7

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--1250 E. Arques Ave., Sunnyvale, CA 94088-3470. Tel--(408) 746-6000. Website--http://www.amdahl.com Chrmn, Pres. & CEO--J. C. Lewis. EVP, CFO & Secy--B. J. Ryan. Investor Contact--A. William Stewart. Dirs--M. R. Hallman, E. F. Heizer, Jr., K. Kojima, J. C. Lewis, B. G. Malkiel, T. Maruyama, G. R. Packard, W. B. Reinhold, T. Takaya, J. S. Webb. Transfer Agent & Registrar--Bank of New York, NYC. Incorporated--in Delaware in 1972. Empl-- 9,900. S&P Analyst: Megan Graham Hackett

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997