STOCKREPORTS		 NetFRAME Systems Incorporated NASDAQ Symbol NETF
19-JUL-97 Industry:
Computers (Hardware)		 Summary: NetFRAME is a leader in multiprocessor servers that offer scalability and continuous availability while supporting industry-standard software.

Recent Price 0.94
52 Wk Range 4.00 - 0.88		 Yield Nil
12-Mo. P/E NM

Quantitative Evaluation:
Outlook (1 Lowest - 5 Highest)
NA
Fair Value
NA
Risk
HIGH
Earn/Div Rank
C
Technical Evaluation:
BEARISH since 11/95
Rel. Strength Rank (1 Lowest - 99 Highest)
3
Insider Activity
NA

Business Profile 22-MAY-97

The company's eroding share price reflects revenue shortfalls and losses due to heightened competition in the server market, a struggling international salesforce, and inventory provisions related to product transitions. Future profitability will depend on the success of the company's product transition from its older NF8500 product line to the recently introduced NF9000 line. In April 1997, NETF announced an aggressive new marketing strategy to increase its sales volume. As part of this strategy, the company has reduced the price of its CPU and I/O electronics to be competitive with mainstream PC server suppliers.

Operation Review 22-MAY-97

Net revenues in the first quarter of 1997 declined 32%, year to year, reflecting lower sales of the company's older NF8500 product, aggressive pricing and lack of availability of the newer NF9000 products. Gross margins declined significantly on the lower volume, aggressive pricing and costs associated with product transition. Operating expenses increased, and the net loss widened to $11,100,000 ($0.80 a share), from $2,764,000 ($0.20).

Stock Performance 18-JUL-97n

In the past 30 trading days, NETF's shares have declined 25%, compared to a 7% rise in the S&P 500. Average trading volume for the past five days was 44,360 shares, compared with the 40-day moving average of 125,745 shares.

Key Stock Statistics

Dividend Rate/Share Nil
Shs. outstg. (M) 14.0
Avg. daily vol. (M) 0.062
Tang. Bk. Value/Share 1.51
Beta 0.32
Shareholders 400
Market cap. (B) $0.013
Inst. holdings 10%
Value of $10,000 invested 5 years ago:NA

Fiscal Year Ending Dec. 31

Revenue (Million $)
1997 1996 1995 1994 1993 1992
Q1 13.64 20.07 13.15 20.48 13.58 7.94
Q2 NA 18.81 19.91 24.01 16.27 9.12
Q3 NA 18.19 21.97 24.55 17.02 10.08
Q4 NA 17.28 21.41 20.10 20.07 11.92
Year NA 74.35 76.43 89.14 66.94 39.05

Earning Per Share ($)
1997 1996 1995 1994 1993 1992
Q1 -0.80 -0.20 -0.39 0.13 0.13 0.04
Q2 NA -0.36 -0.08 0.18 0.15 0.06
Q3 NA -0.56 -0.14 0.19 0.16 0.09
Q4 NA -0.92 0.01 -0.08 0.09 0.10
Year NA -2.04 -0.60 0.42 0.53 0.29

Dividend Data: No dividends have been paid. NetFRAME intends to retain earnings for use in its business and does not expect to pay cash dividends in the foreseeable future.

Business Summary 22-MAY-97

NetFRAME Systems Inc. develops, makes, markets and supports a broad line of high-availability, clustered network servers for local and wide area networks. NETF was one of the first companies to offer a high-availability open-systems server. It began shipping commercial volumes in 1989.

NetFRAME servers are characterized by high availability, scalability and adherence to industry standards. NetFRAME servers, combined with NetFRAME value-added software, provide a high degree of availability, which minimizes downtime resulting from hardware and software failures, system growth and maintenance. The company's servers are scalable, enabling customers to add network connections as the number of users and applications on a local area network grow. This protects customers' investments in their servers and related products, while enabling them to respond to changing business conditions by adding new users and new applications.

In October 1996, NETF introduced the NF9000. The new Pentium Pro-based platform delivers NetFrame's traditional high-throughput, continuous availability and manageability on a cost-effective, 100% PC-compatible platform. The NF9000 platform features a number of technical innovations for the superserver marketplace. Unlike previous NetFRAME servers, which were based on the company's proprietary MultiProcessor Server Architecture (MPSA) I/O bus, the NF9000 incorporates industry-standard PCI I/O architecture and DIMM memory. From a software standpoint, the NF9000 is fully PC-compatible, allowing off-the-shelf software, including Microsoft NT and Novell IntraNetware, to run out of the box.

The ClusterStore 9000, introduced in June 1996, is a mass storage subsystem for NetFrame servers. The NF8560, introduced in August 1996, is an intranet server solution designed to enable customers to create a structure for an intranet and have it up and running in less than sixty minutes. The NF9000is, introduced in December 1996, is a bundled hardware and software intranet solution based on the NF9000. In 1997, the company expects to begin shipment of ClusterData, sophisticated clustering software that supports a wide range of server and storage redundancy and scalability options.

NetFRAME has a worldwide installed base of more than 5,500 servers. It sells its products through a number of integrators and value-added resellers (VARs) worldwide. Export sales provided 9%, 15% and 16% of net revenues in 1996, 1995 and 1994, respectively.

Important Developments

May '97 NETF announced that Unisys Corp.'s Global Customer Services (GCS) business unit was selected as the company's first global reseller and service provider. Unisys will market, sell and support NetFRAME's ClusterSystem 9000 family in the U.S. and over 90 countries in Europe, the Middle East, Africa and Asia.

Capitalization

Long Term Debt: None 3/97).

Per Share Data ($)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Tangible Bk. Val. 2.30 4.35 4.96 4.54 3.90 NM NM NM NA NA
Cash Flow -1.44 -0.19 0.74 0.72 NA -0.23 -0.68 -1.11 NA NA
Earnings -2.04 -0.60 0.42 0.53 0.29 -0.41 -0.82 -1.17 -0.84 -0.62
Dividends Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Payout Ratio Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Prices - High 6 3/8 7 7/8 17 1/2 23 3/4 17 3/4 NA NA NA NA NA
- Low 2 1/4 4 1/4 7 1/8 12 3/4 8 1/4 NA NA NA NA NA
P/E Ratio - High NM NM 42 45 61 NA NA NA NA NA
- Low NM NM 17 24 28 NA NA NA NA NA

Income Statement Analysis (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Revs. 74.3 76.4 89.1 66.9 39.1 21.3 10.9 1.8 Nil Nil
Oper. Inc. -20.8 -2.3 9.3 10.8 NA -1.9 -5.6 -7.6 NA NA
Depr. 8.2 5.5 4.3 2.6 NA 1.6 1.0 0.4 NA NA
Int. Exp. 0.2 2.3 0.2 0.2 0.2 0.4 0.3 0.1 NA NA
Pretax Inc. -28.0 -8.3 6.1 7.8 3.4 -3.5 -6.4 -7.4 -2.8 -1.1
Eff. Tax Rate NM NM 6.40% 7.00% 4.80% Nil Nil Nil Nil Nil
Net Inc. -28.0 -8.1 5.8 7.2 3.3 -3.5 -6.4 -7.4 -2.8 -1.1

Balance Sheet & Other Fin. Data (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Cash 14.0 31.6 30.8 36.3 38.7 3.5 7.8 NA NA NA
Curr. Assets 38.7 60.2 67.2 64.4 52.8 11.3 12.5 NA NA NA
Total Assets 50.3 71.7 77.0 69.7 56.1 14.6 16.0 9.1 2.7 0.4
Curr. Liab. 18.5 12.5 10.6 10.2 5.3 4.9 2.9 NA NA NA
LT Debt Nil Nil Nil 0.1 0.3 0.9 1.3 1.8 1.0 0.7
Common Eqty. 31.8 59.2 66.4 59.4 50.4 8.9 11.8 6.0 1.4 -0.6
Total Cap. 31.9 59.2 66.4 59.6 50.7 9.8 13.2 7.7 2.4 0.1
Cap. Exp. 3.8 6.1 5.1 2.6 NA 0.3 0.5 0.2 NA NA
Cash Flow -19.7 -2.5 10.1 9.8 NA -2.0 -5.4 -7.0 NA NA

Curr. Ratio 2.1 4.8 6.3 6.3 9.9 2.3 4.4 NA NA NA
% LT Debt of Cap. Nil Nil Nil 0.1 0.7 9.5 10.0 23.0 41.5 NM
% Net Inc.of Revs. NM NM 6.4 10.8 8.3 NM NM NM NM NM
% Ret. on Assets NM NM 7.7 11.3 5.8 NM NM NM NM NM
% Ret. on Equity NM NM 9.0 12.9 6.4 NM NM NM NM NM

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--1545 Barber Lane, Milpitas, CA 95035. Reincorporated--in Delaware in 1992. Tel--(408) 474-1000. Website--http://www.netframe.com Chrmn, Pres & CEO--R. L. Puette. VP, Secy, CFO & Investor Contact--Dan McCammon. Dirs--G. E. Eubanks Jr., E. R. Kozel, R. L. Puette. Transfer Agent & Registrar--Boston EquiServe Limited Partnership. Empl-- 225. S&P Analyst: Adam Penn


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