Conference 7.286::digital

    Wouldn't it be interesting if DECs cost cutting measures actually
    backfired with regard to how the industry views it?
    
    Could they perhaps get the wrong idea, such as to think that DEC
    is really in trouble.  Thus we are penny pinching wherever we can
    to get well again.
    
    If this were perceived incorrectly, it could send our stock down
    even further.
    
    Doug

    We have been through cost-cutting cycles before. Wall Steet analysts
    have recognized that we got our costs under control. The stock price
    has gone up.
    
    And it will happen again.
    
    The present stock price is about half of its all-time high. That's
    happened before, too. Several times.
    
    And it will happen again. 

    Are we so different from other major companies?  In the trenches,
    where I work and where all of the customer people I deal with work,
    we see that cost control is causing problems.  ( I can't believe
    I am actually going to defend this)  I would like to believe that
    the economic conditions that cause us to tighten our belts are causing
    executives of our customer corporations to do likewise.  I believe
    that at the top they understand and expect it.
    
    I started in '76.  I was a F.S. guy who worked a lot at DuPont in
    their home office.  During the 10 years that I worked there there
    wer "market slowdowns" and "soft business conditions" and lots of
    other things that didn't directly affect me.  I did notice that
    a recession meant that I stopped installing equipment and started
    reconfiguring equipment.  DuPont was using "operating capital" to
    make their purchases instead of "capital equipment" purchases. 
    I also noticed a pattern in the way they recovered.  In the depth
    of the recession they had a lot of work for me in their R&D 
    department.  Next they send their projects to engineering, so that
    the newly developed products could have a place to be produced.
    Then, if the market actually improved, they would build their new
    process.  When it went on-line they sank a little money into marketing,
    sales and delivery.
    
    Are we so much different?  The market took a huge hit last year.
     It didn't hurt us as much as it did our smallest customers.  And
    it put our large customer's capital programs on hold.  Our business
    is likely to be a little slow for a while.  My crystal ball says
    another year and a half.
    

The thing that feels different to me this time is that there seems to 
more focus on "managing for wall street", or "managing to optimize 
external perceptions", even some "managing for the short-term".  Any 
company that takes their eye too far off the long-term in order to 
quick-fix short-term external perceptions has cause for worry.

    A story from 1968:
    
    I was working for Field Service. I was in charge of doing the in-house
    acceptance tests on PDP-6 computers. The PDP-6 was not one of Digital's
    more reliable machines, no matter how technically innovative it was.
    They had problems, and I was supposed to find them and get them fixed
    before Field Service had to fix them in the field.
    
    On one occasion, a PDP-6 had a reliability problem: it simply wouldn't
    stay up the required 12 hours to run its acceptance test. The month was
    September. I refused to sign the acceptance test papers and told Jack
    Shields why. He took it to Win Hindle. (Do these names sound familiar?)
    Win decided to ship it anyway and fix it in the field. Why? So the ship
    value of the system could be included in the year's sales total and
    look good for the stock analysts. That's not a guess on my part. I was
    told that explicitly by Jack Shields.
    
    That was neither the first nor the last time. Manufacturing in
    Westminster had a painted line on the floor in shipping. Anything
    pushed over that line before the end of the quarter was included in
    that quarter's financial results. It was a mad house near the end of a
    quarter, and particularly near the end of the fiscal year. 
    
    I'm not saying this is good. I am saying it is not the result of the
    "New Digital". 

    re .4
    
    I've been in the field for almost five years now.  There doesn't
    seem to be a notion of what long range planning is.  The scope of
    short term planning is month to month.  Long range planning is quarter
    to quarter.
    
    One of my deepest concerns with DEC is a seemingly too quick attitude
    to cut the losses.  What I mean is that there are investments made
    (such as hiring zillions of sales support people just 1 yr ago) only
    to reassign them to consulting positions now.  It took most of these
    folks 6 - 9 months to come up to speed. 3 months of effective output
    and whammo... reassign.  How can we tell if an investment has paid
    off if it's not allowed a reasonable time frame for fruition?
    
    

    RE: .6
    
       That scenario wastes even more money than is thought to be saved.
    But it happens all the time and in lots of major corporations.
    Some people just don't have very good long-range vision.  That's
    a problem that has plagued corporate America for years.  A quick
    fix to a bigger problem that only perpetuates into a bigger problem
    later on.
    
    
    Bryan

    re: .5

>   One of my deepest concerns with DEC is a seemingly too quick attitude
>   to cut the losses.  What I mean is that there are investments made
>   (such as hiring zillions of sales support people just 1 yr ago) only
>   to reassign them to consulting positions now.  It took most of these
>   folks 6 - 9 months to come up to speed. 3 months of effective output
>   and whammo... reassign.  How can we tell if an investment has paid
>   off if it's not allowed a reasonable time frame for fruition?

    Gee, in our Area, most of the Sales Support people hired last year
    and the year before have either gone to work for Engineering, or
    have quit.  All this "investment" in salaries and training, just
    so that SUN, Oracle, Stellar, HP, and others could have a top-notch
    sales support staff!  Not only that, but a large number of original
    sales support people have also left, disgruntled with the way that
    management has been hiring in new people at higher levels of titles
    and salaries, and with the sinking job conditions in the Field.
    
    Again, we see the short-term mindset at work here.  Management dumped
    some money into staffing up the Field in the last two years, without
    considering that it was an ongoing investment, not just a one-time
    deal.  Now they are saying, "we spent all this money two years ago,
    where's our return?"  Well, the return was a fantastic marketing
    boost, much better customer satisfaction ratings, and a continued
    high-growth rate even during the stock market crash.  As far as
    I can see, the investment paid off handsomely.
    
    Wall Street may be bashing us, but most of the customers I deal
    with are far happier with Digital than they were two years ago.
    If we forget the customer in favor of Wall Street, then we just
    put a tourniquet around our necks to stop a nosebleed.    
    
    Geoff

See LIVE WIRE.  An item entered today deals with this issue.

        Posted as note 598.33 in this conference.