Conference 7.286::digital

1439.0. "Q3 earnings up 8%!" by CALS::HORGAN (go, lemmings, go) Thu Apr 18 1991 12:17

from Livewire, 18-APR-1991

                 Digital reports eight percent revenue gain in Q3

 For the third quarter, which ended March 30, Digital reported total operating
 revenues of $3.5 billion up eight percent from the $3.3 billion of the
 comparable quarter a year ago.  Net income for the quarter was $117 million,
 versus last year's third quarter net income of $25 million.  Quarterly
 earnings per share were $.94 versus $.20 last year.

 For the nine months ending March 30, the company reported total operating
 revenues of $10 billion, up four percent from the $9.6 billion, of the
 comparable period a year ago.  Net income for the nine months was $254
 million, compared with $331 million, a year ago.  Earnings per share were
 $2.06, compared with $2.65 per share a year ago.

 The quarter's results reflect the consolidation of Digital-Kienzle, a German
 company in which Digital acquired a 65 percent interest from Mannesmann A.G.
 for $230 million.  This includes revenues of $79 million and the addition of
 3,900 Digital-Kienzle employees in the quarter.  Before the Kienzle
 consolidation earnings per share were $1.14.  Digital also called for
 redemption on April 15 $100 million of 12 5/8 percent Notes, which will
 reduce the company's ongoing interest expense and eliminate most long-term
 debt.

 "The difficult economic environment of the past several quarters is still
 with us," said Jack Smith, senior vice president of Operations.  "The
 uncertain business outlook, which was heightened by the Middle East conflict,
 is resulting in delays in customers' investments in technology, particularly
 for large systems.

 "Despite this adverse economic climate, we are confident of our overall
 direction and committed to our strategy of providing the most comprehensive
 set of integrated products and services in the industry.  We have made good
 progress in our program of lowering expenses, consolidating our facilities
 and restructuring our workforce.  During the quarter more than 2,200 people
 left the company.

 "We are realigning the sales, engineering and marketing groups into business
 units to encourage innovative action.  These business segments have
 responsibility for generating revenue, controlling expenses, making profit
 and satisfying customer needs.  Given our financial strength we have the
 flexibility needed to make these changes as well as investments in products,
 services and cost reduction."

 Ken Olsen, president, said, "We are seeing the results of investments we've
 made in key technologies and capabilities.  Worldwide service revenues grew
 20 percent as customers recognize Digital's unique capabilities in system
 integration, where we manage large complex projects incorporating technology
 from numerous vendors.

 The company's RISC/UNIX workstation business doubled year to year, as many
 customers continue to show confidence in Digital's workstation and server
 products.  Recently, Digital joined with 20 other companies to announce a
 bold new initiative in open computing.  The Advanced Computing Environment is
 designed to establish widely accepted industry standards that will assure
 compatibility of applications, networking and system management among systems
 from all of the vendors in the initiative.  "Because the new specification
 includes microprocessor chips, software, and data consistent with Digital's
 present RISC/UNIX systems, today's customers have a clear, simple, and fully
 compatible path to the open computing environment of the future," Olsen said.

 While the economy has impacted demand for VAX 9000 systems, the company
 remains confident in its high-end computing strategy.  Digital continues to
 invest in improved price performance for VAX users by incorporating RISC
 technology under the VMS operating system.  Digital's customers can remain
 confident that their investments yesterday and today will be protected as we
 continue to evolve VAX computing into the next decade and beyond.  To date,
 Digital has shipped more than 250 VAX 9000 systems.  Customer satisfaction
 continues to be outstanding as the system gains recognition in the
 marketplace.

 "We are confident in our long-term technology strategy," said Ken.  "The
 marketplace views Digital as the leader in open computing, from our Network
 Application Support software, which implements industry standards, to our
 comprehensive services and our open business approach of satisfying
 customers' unique needs."
---
VAX 9000, and NAS are trademarks of Digital Equipment
Corporation.
UNIX is a registered trademark of UNIX System Laboratories, Inc.

THREE MONTHS ENDED:             MARCH 30, 1991    MARCH 31, 1990

PRODUCT SALES                   $2,100,437,000    $2,079,603,000
SERVICE & OTHER REVENUES         1,419,921,000     1,181,660,000
TOTAL OPERATING REVENUES         3,520,358,000     3,261,263,000
COST OF PRODUCT SALES              989,372,000       973,958,000
SERVICE EXPENSE                    860,405,000       730,239,000
TOTAL COST OF SALES              1,849,777,000     1,704,197,000
RESEARCH & ENGINEERING             397,999,000       405,059,000
SELLING
 GENERAL & ADMINISTRATIVE        1,100,980,000     1,014,088,000
RESTRUCTURING CHARGE                   -0-           150,000,000
NET INTEREST (INCOME)/EXPENSE       (7,742,000)      (37,015,000)
INCOME BEFORE INCOME TAXES         179,344,000        24,934,000
INCOME TAXES                        62,771,000            -0-
NET INCOME                         116,573,000        24,934,000
AVERAGE NUMBER OF SHARES
 OUTSTANDING                       124,140,995       124,959,457
NET INCOME PER SHARE                 $     .94           $   .20

NINE MONTHS ENDED:              MARCH 30, 1991    MARCH 31, 1990

PRODUCT SALES                   $5,955,320,000    $6,080,804,000
SERVICE & OTHER REVENUES         4,010,825,000     3,496,444,000
TOTAL OPERATING REVENUES         9,966,145,000     9,577,248,000
COST OF PRODUCT SALES            2,791,464,000     2,791,113,000
SERVICE EXPENSE                  2,462,770,000     2,184,498,000
TOTAL COST OF SALES              5,254,234,000     4,975,611,000
RESEARCH & ENGINEERING           1,203,808,000     1,201,067,000
SELLING
 GENERAL & ADMINISTRATIVE        3,190,613,000     2,914,359,000
RESTRUCTURING CHARGE                   -0-           150,000,000
NET INTEREST (INCOME)/EXPENSE      (52,574,000)      (81,268,000)
INCOME BEFORE INCOME TAXES         370,064,000       417,479,000
INCOME TAXES                       116,173,000        86,360,000
NET INCOME                         253,891,000       331,119,000
AVERAGE NUMBER OF SHARES
 OUTSTANDING                       123,080,647       125,180,200
NET INCOME PER SHARE                   $  2.06            $ 2.65

fwiw.

And cost of sales went up, too, in Q3.

Nice.

Actually, though, my favorite line is the General Administrative, etc
line.  Despite the many cutbacks in the overhead organizations, we managed
to spend more on administration and so forth than we did last Q3.

What a great company.

:^(    ???    :^)   ???   :^O      I don't know how to feel about it all.

At least the stock went up.

K.

	Product Sales DOWN $125M over the nine months comparison, Service
Revenues UP $500M.