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approach their estimated salvage value of 1% of list within one
year after the announcement.”
Additionally, the DMC Residual Value Report for the third
quarter 1993 forecast commentary for the IBM 9021 models states
that the lack of a list price was bothersome to most users because
of the lack of a reference point to begin negotiations. The report
indicates that there also was no list price for the IBM 9121
models. Thus, at the time of the transaction, IBM no longer
provided list prices and the lack of list prices was not an
unforeseeable event.
We think the market forces that resulted in a rapid decline in
the value of the equipment were predictable in 1993 and, at a
minimum, should not have been ignored by the appraisers and
petitioners’ experts in estimating the residual values.
The M&S report states that IBM typically introduces a new
series (or family) of mainframes every 3.5 to 5 years. Mr. Page,
a vice president of M&S, testified as an expert for petitioners in
this case. His estimate of the residual value of the computers is
based upon a chart from a study he prepared for M&S in spring 1993
using a 10-year useful life. His age/life depreciation curve was
based upon an annual study that he prepared beginning in 1980 and
continuing through 1992. The data for this study came from the
January issues of the “Computer Price Guide” (recognized as the
most authoritative source of secondary market information). In
1993 when he prepared the chart, he was aware of the fact that “the
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