^C^1RANNDOM EVENTS
^CBy Richard and Lavonna Rann

^CEYEWITNESS NEWS

Good Numbers End Apple Fiscal Year:
----------------------------------
  Apple ended what was considered by most analysts as a slow year in the
microcomputer industry with nearly two billion in sales, $1918.28 million. Of
this they reported a $61.22 million net profit, which translates to $2.25
earnings per share for the year. 1986 per share earnings doubled the earnings
of both 85 and 84 which posted $0.99 and $1.05 respectively, and nearly doubled
the earnings of the last boom year of 1983 at $1.28 per share.  Using Apple's
fourth quarter average weekly share price of $34.432, incidentally the highest
weekly average of the year, the price-to-earnings ratio is almost 11%, an
excellent return for a high-tech stock. 

  If the financial numbers indicate any dark cloud on Apple's horizon it is a
failure to increase unit sales. Apple is in a stronger financial position
because it has kept its sales steady while most of its competitors have had
falling sales; at the same time, Apple has made significant improvements in
efficiency. The winter product introduction cycle of the past year, when Apple
introduced the 512k Mac, LaserWriter Plus, and Mac Plus, proved to be good for
Apple. Currently, with the recent introduction of the Apple IIGS, we are at the
beginning of another product introduction cycle. Early problems with the GS
notwithstanding, indications are that Apple will have another good year.

IBM Reports Lower 3rd Quarter Profits:
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  IBM reported a 27 percent decline in profits for the quarter ending September
30. It had $1.1 billion earnings on $11.9 billion revenue, or about $1.76 per
share. Last year during this same period, IBM posted a significantly higher
$2.40 pers share return on a net earnings of $1.5 billion. IBM's real
difficulty is an after-tax profit margin which has declined from 11.8 % in 1985
to 9.9 % in 1986. Its revenues have been helped by the weakening value of the
dollar on world markets, but that is the only financial bright spot. Over the
past months, IBM has invested heavily in new facilities intended to lower unit
cost through high volume production. Until these facilities come on line
towards the middle of 1987 with new products, IBM's profit margin will remain
under pressure.

Commodore Posts Profit:
-----------------------
  Towards the middle of 1987 Commodore posted its first profit in several 
quarters. All Commodore products, 64, 128, and Amiga have shown steady sales 
improvement over the third quarter even though they did not cause consumer 
stampedes to the market place. The modest profit, about $.12 per share, is at 
the very least a step in the right direction. The only question now is whether
Commodore will earn enough this Christmas season to provide the needed cash 
flow for the next year's operations. 

NEC Fires New Salvo in Clone Wars:
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  NEC Corp has introduced a new laptop personal computer that it says will run
faster than any other portable IBM PC compatible. MultiSpeed is smaller than a
briefcase, has a fold-up screen, and is available in two speeds.  It comes with
two 3.5-inch drives and 640K RAM. This is all to be priced at under $2000.00.
Look for it to be on the store shelves by December.

Financial Pressure Still on:
----------------------------
  Digital Research announced a 22% reduction in its workforce. This translates
into about 70 employees worldwide. DRI has experienced steadily declining sales
on its DOS and GEM product lines.

  Macintosh hard disk maker, Micah Distribution Inc, filed for Chapter 11
bankruptcy one day after being taken over by the Solitare Corp.  Solitare is
using Chapter 11 as a business strategy to give them time to reorganize the
newly acquired company.  They intend to bring all manufacturing into the
company, and at the same time introduce a new 30 meg hard disk.

On The Legal Front:
-------------------
  The U.S. Senate passed and sent to the President the Electronic
Communications Privacy Act of 1986. The bill would extend "Wire tap" protection
to private wireless, data, and video communications. It was supported by nearly
the entire communications industry. 

Tandy Pressures All Markets:
----------------------------
  Tandy Corp. announced price reductions and a new color monitor bundling plan.
The new prices and deal will be supported by a major television advertising
campaign.  The models covered in the price cut represent all the Radio Shack
computer lines, from the laptop 200 and 600, Color Computer 2 and 3, to the
MS-DOS compatible 1000sx and 1000ex.

Macintosh Making Inroads into 500:
----------------------------------
  After a few years of talking, Apple seems to be doing what it claimed by
providing a viable alternative to MS-DOS. A number of companies have lined up
squarely behind Apple while many others are finding the Macintosh perfect for
specific functions. Apple's growing acceptance is most obvious when one looks
at the number of software houses that have been adding MacIntosh versions to
product lines that have been previously limited to MS-DOS. A Mac version of
Dbase, and most recently, the Microsoft announcement of Version 3.0 of Word for
the Macintosh, are good examples. Word is the first Mac program to support
Document Content Architecture (DOC), the new standard which makes file
transmission to MS-DOS systems easier.  Completely compatible with Aldus'
Pagemaker, it is another tool that strengthens Mac in the business marketplace.

  Other recent products also serve to increase Mac's compatibility with MS-DOS.
Tangent Technologies Ltd. announced PC MacServe which allows PCs and Macs to
share Mac disk volumes over Appletalk LAN, and PC Mactxt for transferring IBM
PC word processing files to a Mac and converting them into Mac Write documents.
The two software products are designed to enhance Tangent's popular Macbridge
product. These products should serve to strengthen Apple's hold over desktop
publishing, even in MS-DOS shops.

  With new lower prices on the Mac and the Mac's advantage in learning time,
Apple computers are becoming quite competitive in the business market. Another
advantage might be the rumored enhancement of the LaserWriter which would add
to speed, increase resolution, increase the number of fonts, and add to memory
capacity. With the new top end LaserWriter, Apple is expected to announce a low
end, more limited version for homes and small businesses, priced around $2000.

80386 Arrives; is it Important?
-------------------------------
  For the past several months the computer press, as well as such notable
sources of information as the Wall Street Journal, have been screaming, "The
80386 is coming!" There seems to be no end of voices proclaiming how wonderful
it will be when it gets here. The implication is that the 80386 will
revolutionize microcomputers. This implication lives on, even though the Wall
Street Journal admitted, in its lengthy article on Intel, that the software to
use the 80386 properly, would not appear for nearly two years after the
introduction of the processor. Intel spent four years and $100 million
developing the fastest processor on the market. The 80386 will be a welcome
speed improvement to MS-DOS users running most existing software, but is the
new Intel chip a significant forward step in technology? It is only moderately
faster than the 68000 chip used by the MacIntosh. So is there to be a
revolution? 

  From the beginning, the transistor was an exercise in efficiency, getting
more work from less power. The first transistor was a million times more energy
efficient than a vacuum tube. From that day, forty years ago next year, the
goal has been to pack more circuits into a continually smaller space, to gain
more speed and efficiency. While the development and production prices of a
single chip have gone up, the increased efficiency has allowed the unit cost of
processing data to decline steadily. Even though the chip price is higher
(Intel is selling the 80386 for $299 each), the bigger more complex chips
significantly cut processing costs.

  The chip speed is not the only criteria of useful speed.  New computers based
on the 80386 must have new circuit designs. If you plug the new chip into old
boards, all that is gained is a little speed in processing, and that is not
very much, considering the increase in price. For useful speed, what is
required is a completely redesigned computer. Remember the lesson of the Apple
///. The 6502 processor was not very powerful, but the circuit design got the
most out of it and made it speed competitive with the IBM PC XTs. The problem
is to design the rest of the computer to take advantage of the 80386's power.
If Intel were alone in the market, the 80386 would cause a revolution, but they
are not.
