| DITTO!!!! I wasn't there, but my customer, who is a pretty tough
nut, was full of praise. Coming from him, it was real shocking.
Pleasing, but shocking. He felt that it was very professionally
done, that we were selling solutions, not just IRON.
***WELL DONE*** to all involved. Thanks for the positive PR, you've
made my job a little easier.
Patrick Soehl
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From: NAME: CHAMBERLAIN
INITLS: GEORGE
FUNC: FINANCE
ADDR: MLO12-2/U48*
TEL: 223-5305 <8562@DECMAIL@CORMTS@CORE>
To: See Below
You should feel proud!
Message-class: DECMAIL-MS
From: NAME: STEINKRAUSS
INITLS: MARK
FUNC: INVESTMENT RELATIONS
ADDR: MSO/K10*
TEL: 223-7182 <72326@DECMAIL@CORMTS@CORE>
Posted-date: 25-Sep-1987
Subject: DECWORLD & "WALL STREET"
To: See Below
Several of you have asked about "Wall Street's" reaction to DECWORLD
87. To follow are a few brief comments gleaned from conversations
Brad Allen and I had with the security analyst/money manager
communities. Hope you find them of interest.
1. DECWORLD represented the largest gathering of security analysts
Digital has ever had. Over 125 analysts visited DECWORLD during
its two weeks.
2. Overall, as much of a positive reaction as we've ever had from the
group to any meeting/announcement.
3. DECWORLD served to change the thinking of even the most cynical
analysts. Digital is not just the logical alternative to IBM but
rather an obvious equal.
4. The message of "the network at work" was obvious and well
received. Jon Fram of Bear Stearns said he "got networking
religion late and will have to catch up." Analysts increasingly
viewing the NETWORK AS THE COMPUTER.
5. Analysts who have been extremely positive regarding Digital ...
(Dan Chertoff of Bernstein, Carol Muratore of Morgan Stanley, Marc
Schulman of Salomon Bros., John Dean of Montgomery, Bary Rosenberg
of Cowen, Steve Smith of Paine Webber, etc.) .... were in their
glory. It was as if their upbeat research reports on Digital were
played out before their clients' and their eyes.
6. Universally wonderful comments about Digital employees. Every
analyst we talked with spoke of the enthusiasm and professionalism
of Digital people, be they demo people, registration people or
those who handled long lines or provided general information.
John Dean of Montgomery Securities talked with many people on the
floor who were new to Digital but not the industry. He was very
impressed with the quality of the people and the breath of their
experience. Recall that John spent 20 years with IBM. Several
analysts mentioned that when they walked the floor they got the
pitch whether they wanted it or not.
7. Susie Petersen of First Boston who maintains a cautious near-term
outlook for Digital, in a report dated 9/14 said: "Now that the
stardust from DECWorld has settled, we remain highly impressed
with the conference's breadth and still cautious about Digital's
spending outlook for the first half of fiscal 1988.
What we saw at DECWorld wasn't a happening; it was a siege.
Digital has progressed from a minicomputer vendor serving the
scientific crowd to a full-line information systems company
equally comfortable with corporate America. The breadth of the
product exhibits -- publishing, medical, legal, financial
services, government, telecommunications -- were overwhelming and
could have been staged by only one other, highly Blue competitor.
When IBM claims it can't justify the cost, we point out that
Digital's $25 million party added over $1 billion to the firm's
market capitalization in two days!
But Digital did more than just strut its product stuff at
DECWorld. Digital is convinced that it has the one true faith:
networks of computers which distribute their processing power into
the hands of the people who use it. This commitment to
"peer-to-peer" networking which links equals together rather than
IBM's "hierarchical" approach which maintains a central mainframe
with smaller computers communicating through the mainframe is
religion to the Digital employees I met in Boston.
At the product introductions on Wednesday, when Ken Olsen was asked
what Digital would do with its $2.2 billion in cash, he answered:
"When the message finally gets across, we're going to need all the
cash we can get to handle the growth." DECWorld was Digital's $25
million, sugar-coated way of beating that message of peer-to-peer
networking into us, even if we didn't want to hear it.
We agree with Mr. Olsen that there is enormous opportunity for
Digital to leverage its emerging status as the other company
besides IBM a customer or supplier or software house has to do
business with into above-industry growth for the next decade. Our
theme of caution remains focused on differentiating between the
short term and the long term; in the short term, Digital needs to
build a broader foundation of people and plant to complete its
transition from minicomputer star to global information galaxy of
the 1990s.
If the necessity of these costs were fully reflected in the
stock price, we wouldn't worry about them, either. However, we
believe in the excitement of the QEII and acres of product
demonstrations, expectations for Digital's next four quarters
might have risen too high. This is worrisome for a stock which is
over 85% institutionally owned and doesn't pay a dividend.
We've said it before, but DECWorld further substantiated our view:
the actions that Digital is taking to build a legend do not
coincide with the goal of short-term earnings maximization."
8. Jean Orr, Drexel Burnham Lambert, in a report dated 9/15:
"With the DECWorld'87 trade exposition, heavy media exposure, and
a large number of new product introductions, together with gains
in revenues and earnings while the industry struggles and a
clearly enunciated and understood approach to computing, DIGITAL
IS THE TALK OF THE INDUSTRY. Competitors are comparing themselves
with Digital at least as much as IBM these days and, in many
cases, the comparision with IBM is more favorable that the
comparision with DEC.
If an ideal computer system for an entire company is described,
given current technology and consideration of costs, and then
compared with what is available in the market today, Digital's
product line comes out as close as any supplier to this ideal
system. The company's computer system is clearly closer to the
ideal than those of IBM and virtually every other competitor while
many of those companies are working toward a more DEC-like
solution. Digital is recognized as the number two vendor in the
industry and as the leader in terms of distributed data
processing, compatible computers throughtout the product line and
the ability to network.
In addition to the momentum that DEC is currently exhibiting, the
company is strongly positioned for the next several years. Users
are moving to distributed data processing, more networking and
communicaton between various computers within the organization and
fewer (ideally none) conversions from one operating system to
another. WE BELIEVE THAT DIGITAL WILL GROW 20% PER YEAR OVER THE
NEXT FIVE YEARS."
9. Finally, even the security analysts, used to life in the fast lane
as they are, were suitably impressed with the scope and logistics
of DECWORLD. By their very nature, analysts seek to control
situations in which they are an active player. At DECWORLD, they
were just another player.
Distribution List: (DELETED)
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