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This Mainframe Just May Power Up


Inside Wall Street

THIS MAINFRAME JUST MAY POWER UP

Mainframe computer makers are probably the most unloved among the depressed technology stocks. Yet the lumbering mainframe companies may stage a sharp comeback when the economy recovers. That's what money manager Scott Black believes, and he's buying not IBM but Amdahl shares, now down to 13 from a high of 20. Why?

Technically, the stock has become attractive because it has dropped to a new low, and it's selling below its book value of $14 a share, notes Black. But more than that, he sees Amdahl--a maker of IBM-compatible high-performance computer systems--posting strong results next year, thanks to its new 5995M mainframe computers.

Black, president of Delphi Management in Boston, estimates 1993 sales of $3.4 billion and earnings of $1.50 a share, up from 1992's estimated $2.8 billion and 50 cents, respectively. With the warm response to its new products and the huge order backlog, he sees Amdahl's net hitting $2.20 in 1994. His estimates are higher than the Street's consensus. Part of his bullishness stems from the belief that Amdahl will boost profit margins next year to 8%--far below the peak of 12% in 1988 but way above this year's 5%. Black figures the stock could hit 30 in a year.GENE G. MARCIAL


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