The Cincinnati Enquirer from Cincinnati, Ohio • Page 17

AMERICAN STOCKS. B- 8 MUTUAL FUNDS B-10 NEW YORK STOCKS B- 2 OVER THE COUNTER B- 4 EDITOR: ROBERT CLERC, 369-1009 THE CINCINNATI ENQUIRER WEDNESDAY, MARCH 28, 1984 DJ Macintosh Takes Lead In Sales Race i I as, IF SALES of the PCjr do not improve, there will be little financial effect on colossus IBM, whose 1983 revenues ex- ceeded $40 billion, analysts say. Yet because of high expectations, some industry watchers believe that the home computer could become a lingering embarrassment for IBM, whose Personal Computer, or PC, has become an industry standard for desktop business computers. They believe that IBM officials are con-cerned, and speculate that IBM may soon take such steps as changing the product's ad campaign, offering additional hard- ware add-ons to expand its capabilities or trying to sell the home computer through mass-merchandising channels such as mart stores. Critics say IBM went too far in limit- ing PCjr's capabilities so that the home computer would not compete for sales with IBM's more expensive Personal Computer.

They say, for example, that the keyboard is not well-suited for busl- -ness word-processing uses because its keys are flat rather than contoured like those of a typewriter. IBM has also been faulted for failing to make the product available during the past Christmas season, though its announcement came Nov. 1. "If they had It out for Christmas, they would have got- ten volume up, which is what you need i with products at lower price levels," said in William T. Fairbairn III, owner of All Things Computers in Scarsdale, N.Y.

Fairbairn this month cut the price of the more capable of two PCjr models to $995 from its previous $1,295. v. PCJR SALES 225,000 UNITS MACINTOSH SALES 350,000 UNITS InfoCorp estimates By PAUL RICHTER 1984, Los Angeles Times The cardboard boxes carrying new PCjr and Macintosh computers arrived at Broderbund Software at about the same time but to quite different receptions. While the programmers at the San Rafael, software publisher "have been falling over each other to get at the Mac," says Broderbund President Douglas Carlston, "the PCjr's languished in a corner. Now It's in some closet." IBM's PCjr and Apple Computer's Macintosh computers have drawn similar reactions in many places since they hit the market two months ago In a blaze of publicity.

Computer dealers anCMndustry watchers say that while the Mac seems destined to become a hit, PCjr sales so far have been disappointing, in part because the new computer of IBM arch-rival Apple has stolen the show. As slow sales have swelled their inventories of the PCjr, some IBM dealers have recently begun offering the computer at discounts of more than 20. Software publishers and makers of hardware accessories, waiting for PCjr to gain popularity, have been slow to develop the programs and hardware add-on products needed to make it a success, industry officials say. THE MACINTOSH Is in short supply. A backlog of orders continues to build In some parts of the country.

One dealer surveyed by the L.F. Rothschild, Unter-berg, Towbin brokerage reported a backlog of more than 600 orders. While the computer is available from some dealers Immediately, retailers at Computer Plus in Cupertino, for example, say they expect to take four months or longer to fill some orders. Admirers of the computer attribute its early success to features that make it easy to use, and to the way it allows users to draw and create graphics. "The Mac is the first $2,500 impulse Item I've ever seen," said Seymour Merrin, whose Com-puterworks store in Westport, carries Apple and IBM products.

Analysts say first-quarter demand has been strong not only for the Mac, but also for the mainstay Apple He computer, and the new Lisa II the faster, less expensive version of the year-old Lisa. Some analysts say Apple He sales have been strong after a lull that began last year as potential customers delayed purchases while they waited to get a look at the long-heralded PCjr. An IBM spokesman said PCjr sales are "meeting our expectations" and noted that the computer has been available only since Feb. 1. As analysts point out, by most standards the PCjr's sales performance has been satisfactory.

"It's Just that it's not the world-beater that everybody has come to expect from IBM," said John Klefer, analyst with InfoCorp, a Cupertino-based market research company. PCjr Outsold Locally SOME ANALYSTS say IBM effectively confirmed their suspicions about slow PCjr sales when its officials told analysts March 16 that supply for the PCjr is now roughly In line with demand. "In a product this new, that says that demand must be awfully weak which is what others are telling us, too," said Thomas J. Crotty, analyst with the Gartner Group, a research organization In Stamford, that follows IBM activities. InfoCorp, the market research company, recently cut its estimate of the number of PCjrs IBM will ship this year, to 225,000 from 300,000.

The researchers say IBM has shipped slightly more than 10,000 PCjrs to date. According to the research company, Apple has shipped more than 15,000 Macintoshes since the product's Jan. 24 unveiling; InfoCorp estimates that shipments will reach 350,000 for all of 1984. Moreover, "dealers have been telling us that some people have been buying the PCjr because they couldn't get the Mac right away," said InfoCorp analyst John Klefer. (See MACINTOSH, PageB-2) some cases, assure the company that his or her health continues to be good in order to "re-enter" the ranks of the insured at correspondingly low rates.

IN CONTRAST, If the policyholder develops medical problems and cannot do so, the insurance cost rises far beyond the rates of standard annual renewable term. In either case, however, the cost would still probably be much less than that of a whole life policy. "Re-entry term gives a better deal going In," said Christopher Smith, vice president and actuary of the State Mutual Life Assurance Co. of America, in Worcester, Mass. "On a regular term policy, everybody a given age is paying the same rate, regardless of when the policy was Issued." Nevertheless, Sheldon Brudner of Drimal-Brudner Financial Services, a New York financial services firm, cautioned: "Eventually, everybody reaches a point of no re-entry, because his health Is not that perfect.

When you're not in good health, you're paying a lot more and can't go shopping." Jane Bryant Qulnn Discount Clothing: Is It Fair? 1984, WASHINGTON POST The discount phenomenon of the 1980s Is something called off -price retailing. Off-price Is the modern name for a discount clothing store. They specialize in selling name-brand items at a lower price. Since 1979, sales at off-price stores have nearly tripled to S8.5 billion. Big chains like Syms, T.J.

Maxx, Hit or Miss, Marshalls, Loehmann's and Plc-a-Dllly are opening new stores at a rapid clip. Do you really get bargains in an off-price store? Often yes, sometimes no. HERE'S HOW this form of merchandising works: A name-brand manufacturer will produce more of a given line of clothes than traditional department-store and specialty-store customers can absorb. He sells the surplus to an of f-pricer at perhaps 20 to 30 less. The department stores pay more because they typically demand special services.

For example, they want to be able to return unsalable merchandise, and they want the manufacturer to contribute toward advertising the new line of clothes. The department store may also get first crack at selling the clothes to the public. The of f-pricer, on the other hand, agrees not to return any merchandise. He doesn't need an advertising allowance, because he trades off the advertising done by the department stores. The traditional off-price store Is a Jumble of styles and sizes in men's, women's and children's clothing.

Shirts may be strewn across tables and dresses Jammed onto pipe racks. There may be a common dressing room and a policy of cash only. THE NEWER off-price stores, however, look more like a traditional retail establishment: nice displays, separate dressing rooms, a full line of styles and sizes, and a willingness to accept credit cards or checks. The fancier the store, the higher the price. But you'll still find better prices than you'll get In many department stores.

The stock-in-trade of the off-prlcer are his big national brands. They may make up only a third of his stock, but they set the tone and attract the bargain hunters. He'll also carry a good locaj manufacturer at a discount. But there's a great struggle going on, between off-pricers and the major department stores, with the clothing manufacturers caught In the middle. Some department stores say they won't buy from a manufacturer If he sells to an of f-pricer.

The department stores say it isn't right to expect them to do all the advertising and promotion that creates interest in the style, If the public can then buy the Item at a discount Just down the block. Some manufacturers, among them, General Mills (Ship 'n Shore blouses, Izod Lacoste sportswear) and the famous shirtmaker, The Van Heusen have publicly taken a stand against selling to of f-prlcers. BUT THE off-pricers say they can get most of the merchandise they want through the back door, if It's not available directly. A discount store in a major city may find it hard to get enough national brands, because they're right In the department stores' backyard. But clothing manufacturers may be willing to sell to off-pricers In out-of-the-way locations.

Some manufacturers simply Ignore the department-store complaints and sell to all comers. To assure 'themselves of a full line of merchandise all the time, the off-pricers do two things: They make a deal with a clothing manufacturer to make copies of brand-nama deal with a clothing manufacturer to make copies of brand-name products for the off-price store. A manufacturer may make virtually the same Jacket for a brand-name house and for an off-prlcer, putting different labels on each. These clothes, too, can be bargains. Off-pricers also have their own, separate line of clothes, generally in classic styles.

Here's where you have to be careful. The price tags on these clothes may say, for example, "regular price, $50; your price, $38." But because these clothes aren't sold anywhere else, there's no such thing as a higher, "regular price." These price tags are misleading. The clothes may be perfectly good value, but they're being sold as something they're not. By all means patronize off-price stores. Thanks to them, the department stores have been lowering their prices and running more sales to compete.

thing right now. Also, they're used to seeing a $200 price tag on home computers, but often those are of limited use and end up in the closet in six months." He thinks a successful ad campaign, a strong holiday season and new software will boost PCjr sales. No such Inducements have been needed for the Macintosh, however. "We've been sold out of every delivery before they got here," said Sandy Garner, a salesmen at Cincinnati Computer Store, 425 Walnut St. She describes the typical buyer as "upper middle class, looking for a combination officehome system." Macintoshes are in short supply, she said, and her store is selling them on a first-come basis to people who can pay the full purchase price In advance.

Ted Heuser, manager of a Comput-erland franchise downtown, said he hasn't counted the PCjr out yet, however. "Both products are still pretty new," he said. "I'd say, long-term, they both should do well." -GREGG FIELDS In the highly competitive Insurance industry, a number of primary Insurers thus scrambled to develop new means of attracting and retaining customers during the middle to late 1970s. Among the Ideas coming forth during that era of escalating price wars was re-entry term. One of the spurs to re-entry term was the hope by both primary insurers and reinsurers that, if they offered relatively low rates for a fixed period, Insurance buyers would not comparison-shop at the end of every policy year for a cheaper annual renewable term policy.

Some executives In the insurance business believe, however, that sophisticated buyers are still periodically looking at other companies' rates even when they own re-entry term policies. These policies typically have rates that are lower than the more conservatively priced term policies for the first three or, more frequently, five years that the insurance is in force. But at the end of such time, the policyholder must pass another physical test, usually by his or her own physician, or, In Re-Entry Term Insurance Can Cost More Later Local computer dealers say Apple Computer's new Macintosh model has succeeded in taking a bite out of sales of IBM's PCjr personal computer. The trend Is a reversal of last year, when IBM's PC was an astounding success, but Apple Lisa and Apple He failed to build a steady corps of followers. "Macintosh is selling much better, hands down, than PCjr, in my stores," said Jim Levinson, owner of Comput-erland franchises in Hyde Park and Montgomery.

He, however, doesn't think the products are competing for the same market. A Macintosh with a printer comes to around $3,000, and is popular with offices looking to Improve productivity, he said. Conversely, the PCjr sells for about $1,500, and is more designed for home use. "It's like asking how Cadillac sales are doing, versus Volkswagen Beetles," he said. "I keep wondering why people compare the two." His explanation for the poor PCjr performance: "People looking to buy a home computer aren't buying any able term, which not only provides for higher rates each year but also guarantees that the policy will be renewed automatically by the insurer without further physical examinations.

Re-entry term whose formal name is "select and ultimate" term, because of the selectivity in choosing participants who can continue this insurance arrived on the scene when consumers were becoming more conscious of inflation and were demanding cheaper rates for their term policies. SUCH DEMANDS affected the way that primary insurance companies selling to the public determined their charges, as well as the rates established by the reinsurance companies, which buy a large percentage of these term-insurance risks from primary insurers. Tax Tips BY LEONARD SLOANE 1984, N.Y. Times News Service NEW YORK-Many 'life insurance buyers have become increasingly aware during the last five to 10 years of a type of policy, popularly called re-entry term Insurance, that offers the potential for significantly lower annual premiums. But such contracts also have the potential for substantially larger premiums In future years if the Insured Is unable to meet the insurance company's medical requirements.

Term Insurance Is a form of life Insurance giving protection for a limited, specified period. Unlike the traditional whole life Insurance, which is considerably more expensive, It does not generate any cash values. Much of this term Insurance is annual renew Most Students Qualify Twice As Dependent BY DONALD SIEKAAANN Enquirer Contributor Every year I receive many tax questions from friends, associates and acquaintances about summer and part-time Jobs for their older children. They want to know who will get the applicable dependency deduction and the tax consequences of scholarships or part-time Jobs. The first question normally asked is, "Can I take my child as a dependent on my tax return?" This is Usually not a problem when the child is very young, but as the child gets older and has a part-time job andor other outside income, the question arises more frequently.

Basically, a parent is entitled to a deduction of $1,000 for each child who qualifies as his dependent. Although there are several tests to determine if any person is a dependent, the two at Issue here are the support test and the gross-Income test. In order to claim a child as a dependent, you usually must provide more than half of his support during any year. (There can be an exception In a divorce or separate-parent situation.) This is rarely a problem if the child is a student, because support includes items such as food, clothing, education, medical and recreational costs, as well as lodging. If the child receives a scholarship, it is usually disregarded In determining whether the parent provides over half the support for full-time students.

IF THE support test is met, you must then look to gross income. Usually an individual cannot be claimed as a dependent If they have more than $1,000 in gross income. In many cases, children will have summer or part-time Jobs that will exceed $1,000 of Income, including any Interest and dividends. This rule doesn't apply for any child under 19 years of age or a full-time taxpayer (Including a child) is considered to have deductions of $2,300 and this amount is built into the tax tables. Unless the taxpayer has Itemized deductions, i.e., medical, Interest, taxes, contributions, that exceed $2,300, he normally will get no benefits from Itemizing deductions.

FOR EXAMPLE, if someone has $3,300 or less of income, he would pay no tax due to the $2,300 zero-bracket amount and the $1,000 personal exemption. But again, there is an exception when dealing with children's returns. Many situations permit a child to be claimed on his parents' tax return as a dependent, as well as on his own return. In that situation, the child must Itemize deductions on his return and cannot use the $2,300 zero-bracket amount against unearned income such as Interest and dividends. For example, if a child has $3,300 of Interest and dividends and can be claimed as a dependent on his parents' return, he would not get the advantage of the $2,300 bracket amount and so would pay some tax If itemized deductions did not offset the Income.

The zero-bracket amount can be used to offset earned Income up to $2,300. In the above example, if the $3,300 had come from a part-time job rather than dividends and Interest, he would pay no taxes whatsoever. This entire concept of Itemized deductions on children's returns versus the zero-bracket amount Is very confusing. A worksheet to determine the effect on a dependent child's return Is shown on page 13 of the Instructions to Form 1040. Donald Slekmann is a partner In the Cincinnati office of Arthur Anderson Co.

If you have a tax-rela tedq like answered, please direct It to Tax Tips, co The Cincinnati Enquirer, 617 Vine Chiron ptl, Ohio 45201. day student for some part of at least five calendar months. As you might suspect, the rules allow most students to qualify as a parent's dependent. Although the student is taken as a parent's dependent, he can still still claim himself as a dependent on his own return, so we are in the unusual situation of an Individual being claimed as a dependent on two separate returns the parent's and the child's. Although scholarships are not counted in the support calculation, there is still a question of taxability.

Generally speaking, scholarships and fellowships are exempt from taxes and this exemption applies to grants paying for all or part of tuition, as well as any fees, books, travel, board, lodging, laundry, etc. AS IN all other rules, there are exceptions. A scholarship or fellowship Is only exempt from taxes In a very narrow sense. It will be taxed If it Is conditioned upon certain teaching, research or other services required of all students working toward a degree, with or without scholarship, such as student teaching. For students who are not candidates for a degree, there are further restrictions on the non-taxable grant which normally Is a maximum 36 months at $300 a month.

As you can see, these are very favorable tax consequences, very well worth the effort. The most difficult concept In dealing with children's returns is the "zero-bracket amount." In effect, the amount equals the old standard deduction under the prior tax law. It means any single.