Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, November 12, 1993                   TAG: 9311120151
SECTION: BUSINESS                    PAGE: A-9   EDITION: METRO 
SOURCE: The New York Times
DATELINE:                                 LENGTH: Short

IBM MAY SELL GOVERNMENT CONTRACT UNIT

Federal Systems, based in Bethesda, Md., provides both conventional data processing and specialized computing for aerospace applications - primarily to the Defense Department and other federal agencies.

IBM said it had been contacted by several parties regarding a potential sale of all or part of the unit, and that it was evaluating the inquiries. The company would not disclose the names of any potential buyers, and emphasized that it had made no decision involving a sale.

"We were approached by several companies from the outside," said Rob Wilson, an IBM spokesman. "We don't know if we will go ahead and sell the unit," he said.

Analysts said the sale of the Federal Systems unit made sense because it was outside the core strategy of International Business Machines Corp., and because increasing profits from business with the federal government is particularly difficult.

"Federal Systems is not in the mainstream of what IBM does, which is commercial computing," said Jay Stevens, an analyst with Dean Witter. "We've seen other large companies, like General Electric, get out of military business and sell to companies devoted entirely to it," he said. "It's a good deal for whoever buys it and for IBM itself."