| Title: | The Digital way of working |
| Moderator: | QUARK::LIONEL ON |
| Created: | Fri Feb 14 1986 |
| Last Modified: | Fri Jun 06 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 5321 |
| Total number of notes: | 139771 |
Quarterly financial results:
Copyright � Dow Jones & Co. 1992
Source: Dow Jones News Service
Headline: Digital Equipment -2-: 4Q Earnings Table >DEC
Time: Jul 23 1992 0753
Story:
Digital Equipment Corp. (DEC)
4th Quar June 27:
1992 1991
Sales $3,905,784,000 $3,944,859,000
Net income a (1,855,132,000) b (871,318,000)
Avg shrs 125,691,368 122,986,814
Shr earns:
Net income a (14.76) b (7.08)
Figures in brackets are losses.
a. Includes $1.5 billion restructuring charge.
b. Includes $1.1 billion restructuring charge.
7:53 AM
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 2015.1 | Year-end Results from LIVEWIRE | IMTDEV::BRUNO | Father Gregory | Thu Jul 23 1992 09:18 | 192 |
Worldwide News LIVE WIRE
Digital reports year-end results
Digital today announced operating results for the fourth quarter and full
fiscal year that ended June 27, 1992.
For the quarter, the Company absorbed an operating loss of $188,069,000,
before a restructuring charge of $1.5 billion. This charge was primarily
for employee separations, facility consolidations, and related
administrative costs. The net result for the quarter was a loss of
$ 1,855,132,000 or $14.76 a share, compared with a loss of $871,318,000 or
$7.08 per share for the same period a year ago.
For the full fiscal year ended June 27, 1992, net loss was $2,795,507,000
compared with a loss of $617,427,000 last year. The current year's loss
includes a charge of $485,495,000, applied retroactively to the first
quarter of the fiscal year, for the one-time cumulative effect of an
accounting change, created by the implementation of an Employer's Accounting
for Postretirement Benefits other than Pensions. Results for the first three
quarters also have been restated to reflect the impact of $51 million
additional expense resulting from the change in accounting as of the
beginning of the fiscal year. On a per share basis, the loss for the year
was $22.39, including $3.89 for the one-time cumulative effect of the
accounting change. This compares with a loss of $5.08 last year.
For the quarter, the Company reported total operating revenues of
$3,905,784,000 down 1% from the $3,944,859,000 of a year ago. For the full
fiscal year, total operating revenues were $13,930,872,000, essentially flat
with $13,911,004,000 last year.
Kenneth H. Olsen, President, said: "In 1992 Digital unveiled the fastest and
most powerful chip technology in the industry. At the same time, our
financial results continue to disappoint us. We face an economic slowdown
in virtually every major geography, particularly in Europe and Asia. We are
taking actions designed to increase revenues, increase market share, reduce
costs and improve our efficiency."
Product revenues declined due to several factors including a continuation of
weak economic conditions, highly competitive pricing, and the negative
impact of foreign exchange rate movements. The Company continued to ship
more computer systems compared with the prior year, at a lower average price
per system. The Company's services revenues continued to grow, so total
revenues were essentially flat year-to-year. The Company's overall costs
remain too high for this level of revenue, resulting in operating losses for
both the quarter and the year.
John F. Smith, Senior Vice President, Operations, commented on the results.
"Our game plan for recovery remains intact: continue cost reductions,
generate revenue growth, and manage the balance sheet. While we've made
progress in some areas, we need to continue the effort and do more. We
intend to continue the cost reduction efforts," he added. "As a result, the
Company absorbed a restructuring charge of $1.5 billion to be used for
employee separations, plant consolidations and associated costs. While our
goal is to return to profitability as soon as possible, for the remainder of
1992 we remain cautious about both revenues and profits due to the
uncertainties in both the industry and worldwide economies."
"To generate revenue growth in the current environment, we have several
efforts under way," Smith continued. "We demonstrated our industry solutions
to over 30,000 existing and new customers at our DECworld exhibition in May.
Recently we laid out a clear and consistent upgrade path to take our
customers into the future with Alpha, and we are encouraged by the customer
response. Last week we announced new VAX systems that are board upgradeable
to the Alpha platform."
"Our cost reduction efforts continue," Smith added. "Total headcount was
126,000 at the end of fiscal year 1989. Over the last two years, we have
added an additional 11,000 employees primarily through acquisitions while
reducing overall headcount. At the end of this year headcount was 113,800,
for a total reduction of more than 23,000 since 1989. This included 3,700
people in the U.S. who left through a special early retirement program last
quarter. In addition, over the past few years, total occupied floor space
has declined by 9.2 million square feet, due to facilities that have been
closed or consolidated," Smith added.
"While total cash was reduced from $1.9 billion at the beginning of the year,
to $1.3 billion due primarily to restructuring costs, acquisitions,
investments and the operating loss, we have a focused effort on cash
conservation through management of receivables, inventories and working
capital. In addition, the Company's substantial debt capacity leaves it well
positioned to ensure adequate cash balances to support operations while
continuing to maintain a conservative capital structure."
FOURTH QUARTER ENDED:
JUNE 27, 1992 JUNE 29, 1991
PRODUCT SALES $2,143,345,000 $2,343,195,000
SERVICE & OTHER REVENUES 1,762,439,000 1,601,664,000
TOTAL OPERATING REVENUES 3,905,784,000 3,944,859,000
COST OF PRODUCT SALES 1,220,059,000 1,113,891,000
SERVICE EXPENSE 1,085,419,000 910,255,000
TOTAL COST OF SALES 2,305,478,000 2,024,146,000
RESEARCH & ENGINEERING 485,241,000 445,572,000
SELLING
GENERAL & ADMINISTRATIVE 1,303,134,000 1,281,016,000
RESTRUCTURING CHARGE 1,500,000,000 1,100,000,000
NET INTEREST (INCOME)/EXPENSE (13,783,000) (16,091,000)
LOSS BEFORE INCOME TAXES (1,674,286,000) (889,784,000)
INCOME TAXES 180,846,000 (18,466,000)
NET LOSS (1,855,132,000) (871,318,000)
AVERAGE NUMBER OF SHARES
OUTSTANDING 125,691,368 122,986,814
NET LOSS PER SHARE $(14.76) $(7.08)
OPERATING RESULTS FOR THE TWELVE MONTHS ENDED:
JUNE 27, 1992 JUNE 29, 1991
PRODUCT SALES $7,696,029,000 $8,298,515,000
SERVICE & OTHER REVENUES 6,234,843,000 5,612,489,000
TOTAL OPERATING REVENUES 13,930,872,000 13,911,004,000
COST OF PRODUCT SALES 4,248,118,000 3,905,355,000
SERVICE EXPENSE 3,883,705,000 3,373,025,000
TOTAL COST OF SALES 8,131,823,000 7,278,380,000
RESEARCH & ENGINEERING 1,753,898,000 1,649,380,000
SELLING
GENERAL & ADMINISTRATIVE 4,680,822,000 4,471,629,000
RESTRUCTURING CHARGE 1,500,000,000 1,100,000,000
NET INTEREST (INCOME)/EXPENSE (57,659,000) (68,665,000)
LOSS BEFORE INCOME TAXES&
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE (2,078,012,000) (519,720,000)
INCOME TAXES 232,000,000 97,707,000
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE (2,310,012,000) (617,427,000)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX (485,495,000) ---
NET LOSS (2,795,507,000) (617,427,000)
AVERAGE NUMBER OF SHARES
OUTSTANDING 124,864,122 121,557,705
LOSS PER SHARE AFTER TAXES
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $(18.50) $(5.08)
LOSS PER SHARE ON CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $ (3.89) ---
NET LOSS PER SHARE $(22.39) $(5.08)
Q4 - FY92
PRODUCT SALES................................... $2,143,345,000
SERVICE AND OTHER REVENUES...................... 1,762,439,000
TOTAL OPERATING REVENUES........................ 3,905,784,000
COST OF PRODUCT SALES........................... 1,220,059,000
SERVICE EXPENSE................................. 1,085,419,000
TOTAL COST OF SALES............................. 2,305,478,000
GROSS MARGIN.... 41%
RESEARCH & ENGINEERING.......................... 485,241,000
SG&A (SELLING, GENERAL & ADMINISTRATIVE)........ 1,303,134,000
RESTRUCTURING CHARGE............................ 1,500,000,000
OPERATING INCOME/(LOSS)......................... (1,688,069,000)
INTEREST INCOME................................. (24,447,000)
INTEREST EXPENSE................................ 10,664,000
INCOME/(LOSS) BEFORE INCOME TAXES............... (1,674,286,000)
TAXES (TOTAL FEDERAL, STATE & FOREIGN).......... 180,846,000
NET INCOME/(LOSS)............................... (1,855,132,000)
EPS............................................. $(14.76)
AVERAGE SHARES OUTSTANDING...................... 125,691,368
BALANCE SHEET/CASH FLOWS - Q4 FY92
CASH & TEMPORARY CASH INVESTMENTS............... $1,337,172,000
ACCOUNTS RECEIVABLE (NET)....................... 3,594,268,000
(RE: A.R. DAYS SALES OUTSTANDING).............. 83 days
INVENTORIES: RAW MATERIALS........ 264,871,000
WORK IN PROCESS...... 495,632,000
FINISHED GOODS....... 853,531,000
TOTAL INVENTORIES $1,614,034,000
PREPAID EXPENSES................................ 352,570,000
DEFERRED INCOME TAX CHARGES, NET................ 222,794,000
TOTAL CURRENT ASSETS............................ 7,120,838,000
NET PROPERTY, PLANT & EQUIPMENT................. 3,569,702,000
TOTAL ASSETS.................................... 11,284,309,000
SHORT TERM DEBT (CURRENT PORTION OF LTD)........ 49,061,000
TOTAL CURRENT LIABILITIES....................... 5,106,048,000
DEFERRED TAX CREDITS NET........................ 23,033,000
LONG TERM DEBT.................................. 41,636,000
POSTRETIREMENT BENEFITS......................... 1,182,658,000
TOTAL LIABILITIES............................... 6,353,375,000
STOCKHOLDER'S EQUITY............................ 4,930,934,000
BOOK VALUE PER SHARE............................ $38.58
CAPITAL SPENDING (ADDITION TO PP&E) - QUARTER... 260,987,000
DEPRECIATION & AMORTIZATION - QUARTER... 205,198,000
CAPITAL SPENDING (ADDITION TO PP&E) - YEAR...... 710,436,000
DEPRECIATION & AMORTIZATION - YEAR...... 832,828,000
NON U.S. REVENUES - QUARTER... 2,479,764,000
or 63%
NON U.S. REVENUES - YEAR...... 8,798,864,000
or 63%
TOTAL EMPLOYEE POPULATION APPROXIMATELY......... 113,800
| |||||
| 2015.2 | CALS::THACKERAY | Thu Jul 23 1992 10:28 | 7 | ||
If I'd managed to lose nearly three thousand million dollars in one
year, I would probably cut my own head off, which is an extremely
difficult, not to say dangerous, undertaking.
Tally-ho,
Ray
| |||||
| 2015.3 | Gulp! | ICS::DONNELLAN | Thu Jul 23 1992 10:36 | 2 | |
These results are devastating. $2.8 billion loss for the year? Have
any other companies lost this much and survived?
| |||||
| 2015.4 | A lot of it for future severance. | ESTASI::HARBIG | Riempendo di vuoto il nulla. | Thu Jul 23 1992 10:44 | 10 |
re -1
Remember the 2.8bn loss is not an operating loss.
Almost 2.0bn is for the restructuring charge and
the accounting change.
Anyone know what the accounting change consisted
of?
Max
| |||||
| 2015.5 | Retiree benefits | CIVIC::GIBSON | Thu Jul 23 1992 10:48 | 6 | |
re: .4
The accounting change is an accrual for future medical benefits for
retirees.
Linda
| |||||
| 2015.6 | numbers | BOOKS::HAMILTON | All models are false; some are useful - Dr. G. Box | Thu Jul 23 1992 10:52 | 14 |
re: .4
The operating loss is an important number. (188M) is a big
number, but at least it's not as bad as Q3 (294M).
Hopefully Q3 was the bottom.
I'm worried about the cost of sales number, which continues to
climb. In fact, product sales were down, while COS was up (compared
to Q4 of last year).
Glenn
| |||||
| 2015.7 | I'm depressed | ZPOVC::GGLOH | when the going gets tough... | Thu Jul 23 1992 11:10 | 1 |
2.8 B *LOSS* whichever way you look at it, is *BAD* news. | |||||
| 2015.8 | Accounting 101 | SDSVAX::SWEENEY | Rum, Romanism, Rebellion | Thu Jul 23 1992 11:17 | 8 |
"Cost of Sales" is the "Cost of Goods Sold" or the cost of the
transformation of raw materials and acquired components into inventory.
It is a reflection of the manufacturing process not the selling
process. The salaries and expenses of sales reps do not appear in that
line.
"Selling, General, Administrative Expenses" are the non-manufacturing
charges.
| |||||
| 2015.9 | Share Price. | KIRKTN::KMACDONALD | Thu Jul 23 1992 11:18 | 3 | |
Whats happening to the share price. Has there been any reaction.
Kirk
| |||||
| 2015.10 | ROYALT::TASSINARI | Bob | Thu Jul 23 1992 11:22 | 5 | |
DEC 41, change +0 1/2; DJIA 3281.12, change +3.50 at 10:15. Report entered at Thu Jul 23 10:14:37 1992. | |||||
| 2015.11 | ABOVE BOOK VALUE | EBBV03::BROUILLETTE | MTSND | Thu Jul 23 1992 11:45 | 2 |
On a positive note, we are above book value. When I saw the book value of $38.58, I believed that we would drop into the mid 30's. | |||||
| 2015.12 | fiscal trends for last 6 years (132 cols) | OZROCK::FARAGO | alphalpha: n. lucerne, best fodder. | Thu Jul 23 1992 11:49 | 125 |
Percentages show changes to corresponding quarter of previous year.
The trends in the expenses items are not good. (132 columns)
Q1FY92 Q2FY92 Q3FY92 Q4FY92 Fiscal92
Product sales 1,863 0% 1,939 -3% 1,750 -17% 2,143 -9% 7,696 -7%
Service & other revenue 1,430 16% 1,540 13% 1,502 6% 1,762 10% 6,235 11%
Total operating revenue 3,293 6% 3,479 4% 3,253 -8% 3,906 -1% 13,931 0%
Cost of product sales 908 3% 1,093 18% 1,020 3% 1,220 10% 4,241 9%
Service expense 888 14% 939 14% 956 11% 1,085 19% 3,869 15%
Total cost of sales 1,796 8% 2,031 16% 1,976 7% 2,305 14% 8,109 11%
Gross Margin 45% 42% 39% 41% 42%
Research & engineering 409 2% 420 4% 429 8% 485 9% 1,743 6%
Selling, General & Admin 1,052 3% 1,176 10% 1,133 3% 1,303 2% 4,663 4%
Restructuring charge 0 0 0 1,500 1,500
Total operating expenses 3,256 6% 3,627 13% 3,538 6% 5,594 15% 16,016 10%
Operating Margin 1% -4% -9% -43% -15%
Interest expense (21) (12) (12) (14) (58)
Income before taxes 57 (136) (274) (1,674) (2,027)
Income taxes 29 3 20 181 232
Net income 29 9% (138) -224% (294) -352% (1,855) 113% (2,259) 266%
Q1FY91 Q2FY91 Q3FY91 Q4FY91 Fiscal91
Product sales 1,866 -6% 1,989 -1% 2,100 1% 2,343 13% 8,299 2%
Service & other revenue 1,228 8% 1,363 16% 1,420 20% 1,602 23% 5,612 17%
Total operating revenue 3,093 -1% 3,352 5% 3,520 8% 3,945 17% 13,911 7%
Cost of product sales 878 0% 924 -1% 989 2% 1,114 8% 3,905 2%
Service expense 780 7% 823 14% 860 18% 910 16% 3,373 14%
Total cost of sales 1,658 3% 1,747 5% 1,850 9% 2,024 11% 7,278 7%
Gross Margin 46% 48% 47% 49% 48%
Research & engineering 402 -1% 404 3% 398 -2% 446 8% 1,649 2%
Selling, General & Admin 1,024 9% 1,066 11% 1,101 9% 1,281 21% 4,472 13%
Restructuring charge 0 0 0 1,100 1,100
Total operating expenses 3,083 4% 3,217 7% 3,349 2% 4,851 31% 14,499 12%
Operating Margin 0% 4% 5% -23% -4%
Interest expense (25) (21) (8) (16) (69)
Income before taxes 35 156 179 (890) (519)
Income taxes 9 45 63 (18) 98
Net income 26 -83% 112 -28% 117 368% (871) 239% (617) -929%
Q1FY90 Q2FY90 Q3FY90 Q4FY90 Fiscal90
Product sales 1,994 5% 2,007 -2% 2,080 4% 2,065 -8% 8,145 -1%
Service & other revenue 1,137 9% 1,178 4% 1,182 4% 1,301 5% 4,797 5%
Total operating revenue 3,131 6% 3,185 0% 3,261 4% 3,365 -4% 12,943 2%
Cost of product sales 882 10% 935 8% 974 16% 1,035 8% 3,826 10%
Service expense 730 12% 724 5% 730 7% 784 4% 2,969 7%
Total cost of sales 1,612 11% 1,659 7% 1,704 12% 1,819 6% 6,794 9%
Gross Margin 49% 48% 48% 46% 48%
Research & engineering 404 11% 392 4% 405 6% 413 3% 1,614 6%
Selling, General & Admin 939 11% 961 8% 1,014 13% 1,057 6% 3,971 9%
Restructuring charge 0 0 150 400 550
Total operating expenses 2,955 11% 3,013 7% 3,273 17% 3,689 18% 12,930 13%
Operating Margin 6% 5% 0% -10% 0%
Interest expense (22) (22) (37) (30) (111)
Income before taxes 198 194 25 (293) 124
Income taxes 48 39 0 (37) 50
Net income 151 -32% 155 -44% 25 -90% (257) -182% 74 -93%
Q1FY89 Q2FY89 Q3FY89 Q4FY89 Fiscal89
Product sales 1,896 12% 2,045 12% 1,994 9% 2,255 3% 8,190 9%
Service & other revenue 1,045 24% 1,134 19% 1,132 14% 1,240 8% 4,552 16%
Total operating revenue 2,942 16% 3,180 14% 3,126 11% 3,495 5% 12,742 11%
Cost of product sales 800 19% 869 19% 840 10% 959 9% 3,468 14%
Service expense 650 24% 687 16% 680 13% 757 7% 2,774 14%
Total cost of sales 1,449 21% 1,556 18% 1,520 12% 1,716 8% 6,242 14%
Gross Margin 51% 51% 51% 51% 51%
Research & engineering 364 22% 376 25% 384 19% 401 4% 1,525 17%
Selling, General & Admin 848 23% 891 18% 901 19% 998 16% 3,639 19%
Total operating expenses 2,662 22% 2,824 19% 2,805 15% 3,116 10% 11,406 16%
Operating Margin 10% 11% 10% 11% 10%
Interest expense (26) (18) (19) (22) (85)
Income before taxes 306 374 340 401 1,420
Income taxes 83 94 83 88 348
Net income 223 -17% 280 -15% 256 -16% 313 -22% 1,072 -18%
Q1FY88 Q2FY88 Q3FY88 Q4FY88 Fiscal88
Product sales 1,686 25% 1,826 22% 1,833 12% 2,196 24% 7,541 21%
Service & other revenue 844 23% 956 23% 991 27% 1,143 28% 3,934 25%
Total operating revenue 2,530 24% 2,782 22% 2,824 17% 3,339 25% 11,475 22%
Cost of product sales 671 16% 729 19% 762 20% 881 25% 3,042 20%
Service expense 525 17% 595 24% 600 17% 707 31% 2,426 22%
Total cost of sales 1,196 16% 1,323 21% 1,361 18% 1,588 28% 5,468 21%
Gross Margin 53% 52% 52% 52% 52%
Research & engineering 298 25% 301 29% 323 26% 384 35% 1,307 29%
Selling, General & Admin 690 38% 757 40% 759 34% 860 32% 3,066 36%
Total operating expenses 2,184 24% 2,381 27% 2,444 24% 2,832 30% 9,840 27%
Operating Margin 14% 14% 13% 15% 14%
Interest expense (24) (28) (26) (28) (106)
Income before taxes 370 430 407 535 1,741
Income taxes 100 100 102 134 435
Net income 270 48% 330 22% 305 -1% 401 6% 1,306 15%
Q1FY87 Q2FY87 Q3FY87 Q4FY87 Fiscal87
Product sales 1,353 1,494 1,631 1,776 6,254
Service & other revenue 686 777 779 893 3,135
Total operating revenue 2,038 2,272 2,410 2,669 9,389
Cost of product sales 578 615 636 703 2,532
Service expense 448 481 513 540 1,982
Total cost of sales 1,027 1,095 1,150 1,242 4,514
Gross Margin 50% 52% 52% 53% 52%
Research & engineering 238 233 255 284 1,010
Selling, General & Admin 498 539 566 650 2,253
Total operating expenses 1,762 1,868 1,971 2,176 7,777
Operating Margin 14% 18% 18% 18% 17%
Interest expense (18) (20) (21) (17) (77)
Income before taxes 295 424 460 510 1,689
Income taxes 112 154 153 133 552
Net income 183 270 308 377 1,137
| |||||
| 2015.13 | RANGER::PANDYA | Thu Jul 23 1992 12:48 | 12 | ||
Re:.4
In this bad times, how come they didnt think of taking this
restructuring charge at another time or distribute over a period
ot time just to make our bottom line look slightly better since
most people look at that rather than distinguish it from the
operating loss.
Or is it that let us get the bad news over with in one shot?
-Atul
| |||||
| 2015.14 | Biting the bullet! | ESTASI::HARBIG | Riempendo di vuoto il nulla. | Thu Jul 23 1992 12:59 | 12 |
re -1
I think, although I don't really know, that the Corporation
is hoping/convinced that this will be the last restructuring
charge that they have to make and they have accrued for the
people and other things they will have to let go during next
fiscal so that FY93 bottom line will represent a "pure"
Operating Result.
I think the turn around is forecast for Q3/93 although I
won't be here to see it:-).
Max
| |||||
| 2015.15 | XCUSME::MACINTYRE | Thu Jul 23 1992 15:14 | 13 | ||
Did anyone notice that in the press announcement, Ken and Jack Smith
are quoted but nothing from Bob Palmer? I believe it was an
intentional attempt to distance Bob from the current results and to set
him up as beginning with a clean slate. These results reflect the
leadership of the old guard. The new guard will be judged on FY93
results.
For what its worth, I firmly believe that Digital will return to
financial strength within the next year.
Marv
| |||||
| 2015.16 | Hop to it! | DENVER::DAVISGB | It's a Happy Helmet, Ren! | Thu Jul 23 1992 16:36 | 16 |
Marv,
I think your analysis is right on (.15).
Also, Bob Palmer doesn't officially represent the company as Pres and CEO
until October 1, 1992. (Board voted him in yesterday).
Hopefully, this puts the $ hit past us and we will see a real LEAP in
Q1. If not....a lot more people will probably be sprouting green
froggy legs from job-hopping....
Gil
Of course, who knows what goes on in the minds of Maynard...
| |||||
| 2015.17 | ALIEN::MCCULLEY | DEC Pro | Thu Jul 23 1992 19:40 | 6 | |
.5> The accounting change is an accrual for future medical benefits for
.5> retirees.
Is that related to the SERP? If so, wouldn't it be yet another hidden
cost of downsizing?
| |||||
| 2015.18 | ALIEN::MCCULLEY | DEC Pro | Thu Jul 23 1992 19:43 | 8 | |
.6> I'm worried about the cost of sales number, which continues to
.6> climb. In fact, product sales were down, while COS was up (compared
.6> to Q4 of last year).
Isn't this what we've been worried about?
So all the emphasis on downsizing and the previous TFSO/SERP packages
have done what?
| |||||
| 2015.19 | Network News Item | SDSVAX::SWEENEY | Rum, Romanism, Rebellion | Thu Jul 23 1992 19:47 | 3 |
A few moments ago, Tom Brokaw on NBC Nightly News mentioned the
financial results and the resignation of the President and Founder,
Ken Olsen.
| |||||
| 2015.20 | low margin x more system = high COS | ZGOV06::SPKEE | Fri Jul 24 1992 00:11 | 5 | |
re: .18
rise in cost of sales is inevitable. thanks to the cut throat
competition ...
| |||||
| 2015.21 | Discounts and Allowances? | MLNOIS::HARBIG | Riempendo di vuoto il nulla. | Fri Jul 24 1992 04:21 | 27 |
Re -1
That is also where part of the crunch is.
We should remember that the Revenue numbers we see in the
Financial Results are net of Discounts and Allowances.
We know that every year we are selling more computing power
for the same or less dollars due to technological advances
but in order to make those sales we are also reducing the
net street price to our customers.
I'm pretty sure from the european numbers I've seen that
Dec has grown substantially from 91 to 92 on a sales
volume basis (number of units and gross list price values).
I'm sure that economies can be made on cost of sales but the
only way to improve margins substantially is to cut overheads
which means people.
The reduction of people isn't just the saving on salaries and
fringes but also facilities costs etc...etc...
This is easy enough in certain areas but in a high tech industry
you've got to be very careful and know exactly where you want
to go and be very discriminating when you start laying off tecchies.
Max
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| 2015.22 | Rationalisation is one thing - | STREEP::BELLCHAMBERS | Fri Jul 24 1992 06:49 | 37 | |
RE .21 Making reductions in the workforce to reduce costs is one thing, it must done in conjuction with an overall sales/marketing/engineering strategy. I know that customers are unhappy with the following: Lack of expertise in the field, both sales and support people Lack of contact with account people Lack of response from the field organisation Lack of information on products, services and directions I beleive we can fix these things if we have a clear statement from the leaders of this company. We can all try to do our own bit but it needs a collective effort from us all. BUT I see us on a different road at the moment. The road we are taking is down a spiral cut costs/people to improve the numbers this in turn leaves us unable to do the right thing for customers and leads to reduced sales and bad numbers. Then we cut costs and people ............. I am hoping that a clear direction will be forthcoming from all the senior managers, VPs etc if it does not then I fear that the spiral will continue. My experience of what is happening in Europe is one of confusion and instability. A dichotomy between rationalisation and the need to be entreprenuerial. I still see groups doing the same type of work or activity. It is a case of who shouts the loudest gets the attention. If we want to see the numbers improve then we need a company that is confident in itself and its products/services. This will come from a stable leadership that sets a mission and objectives that are based in reality. The reality being the requirements and needs of the customer. I await the day. | |||||
| 2015.23 | NPR did a piece on DEC as well | SCAACT::RESENDE | Fri Jul 24 1992 09:21 | 8 | |
>A few moments ago, Tom Brokaw on NBC Nightly News mentioned the
>financial results and the resignation of the President and Founder,
>Ken Olsen.
Last evening I caught the tail-end of a story along the same lines on
NPR (National Publis Radio). If anyone heard the entire piece (it ran
during the 6pm � hour EST), could you post a summary of anything
significant they said?
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| 2015.24 | IMTDEV::BRUNO | Father Gregory | Fri Jul 24 1992 09:27 | 7 | |
CNBC had a truly investor-frightening report on Digital. It was the
same information that we got, but it was presented in a way which gave people
the impression that we had billions in operating losses. A listener would
have expected us to be closing the doors today.
Greg
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| 2015.25 | A little help please. | BOOKS::ANGELONE | Failure: line of least persistence. | Fri Jul 24 1992 09:31 | 26 |
RE: .14
Excuse me... the last "restructuring charge".
What does this mean exactly. Simply put please
no financial flowers. I for one hope this does
NOT mean the end of a package.
Also, if anyone can, a better explanation of
why COS is up and appears to continue yo do so.
Nervous, you bet. Concerned, of course.
But I refuse to let it stop me from doing my job
as long as the company (define it as you may, that
is what WE are) pays me. Will I feel betrayed if
I get the "tap" ? No. If the package goes away
I like others will not stand a chance of finding
work before any benefits run out. Would I stay
in New England. Guess not.
If someone would JUST tell me what I could do
to turn this all around I WOULD DO IT. But the
silence is really starting to get to me.
Luck to all, now back to work.
Rick A
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| 2015.26 | SDSVAX::SWEENEY | Rum, Romanism, Rebellion | Fri Jul 24 1992 09:41 | 6 | |
You've got ask yourself what is an "operating loss" and what is a
"structural loss"? Will we have another "one time charge" for four
years in a row next year?
A loss is a loss and the shareholder's cash is going to be paying out
for the employee separations, lease cancellations, etc.
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| 2015.27 | Not related to SERP | CIVIC::GIBSON | Fri Jul 24 1992 09:58 | 16 | |
re: .17
No, the medical accrual is not related to SERP. This is a new
requirement from the Financial Accounting Standards Board that
all companies must begin to accrue for future medical costs for
retirees within a certain timeframe. They must also continue to
accrue on a regular basis, The big hit is for current retirees
and is one time only. Companies with much larger numbers of retirees
will have correspondingly larger hits, but may have more revenue to
absorb them.
This is to prevent companies going out of business from leaving their
retirees with no funding of promised benefits, and unable to get any
other coverage.
Linda
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| 2015.28 | AAA? | SUOSWS::NIESSER | Fri Jul 24 1992 10:04 | 3 | |
Will Digital still be rataed as a AAA Company?
/Urban
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| 2015.29 | NOTIME::SACKS | Gerald Sacks ZKO2-3/N30 DTN:381-2085 | Fri Jul 24 1992 10:20 | 4 | |
The headline on this morning's Boston Globe is "Digital loses a record $2b; 15,000 layoffs seen." Somehow I'm not surprised that they round up from $1.86 billion to $2 billion. I *am* suprised that they headline 15,000 instead of the 20,000 mentioned (as an upper limit) in the story. | |||||
| 2015.30 | a analysis of financial #s | ROCKT::KUMAR | Fri Jul 24 1992 11:53 | 13 | |
If you look at the numbers a bit, are they really that bad?
1. Forget the charge for a moment, they took a payment 0f 180 million
vs 18 million credit last year. I have never seen someone paying
income tax when they have no income. You reverse this and we have a
profit. May be Financial guru's can explain it.
2. Every company took the retirment adjustment like I.B.M. and G.M.
That is just a paperwork adjustment.
enf
AK
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| 2015.31 | VMSZOO::ECKERT | All dressed up to go dreaming | Fri Jul 24 1992 12:24 | 1 | |
I suspect the income tax is based on revenue rather than profit. | |||||
| 2015.32 | NOTIME::SACKS | Gerald Sacks ZKO2-3/N30 DTN:381-2085 | Fri Jul 24 1992 12:42 | 7 | |
re income tax: According to today's WSJ, "'They did some housecleaning' in hopes of better times ahead, Mr. [Barry] Willman [of Sanford C. Bernstein] said. In the same vein, he added, Digital provided for income taxes of $181 million in the quarter, despite the big loss, to pay down pending tax obligations in Puerto Rico and elsewhere." | |||||
| 2015.33 | That really would be the straw that.... | ESTASI::HARBIG | Riempendo di vuoto il nulla. | Fri Jul 24 1992 12:50 | 6 |
re 31
I know that the fisc anywhere in the world are a voracious
bunch of vampires but thank goodness they still tax profits
and not turnover:-).
Max
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| 2015.34 | strategy? | BOOKS::HAMILTON | All models are false; some are useful - Dr. G. Box | Fri Jul 24 1992 13:43 | 15 |
Looks to me like we dumped every conceivable charge into the
4th quarter. I'm not a finance person, but couldn't the company
have amortized the restructuring and health benefits for retirees
charges over a longer period? If we had done that (assuming
that we are allowed to by law), then this quarter wouldn't have
looked so bleak, but the upcoming quarters would probably
have looked a bit worse than they now might.
I wonder about the strategy. Is the purpose to give Bob Palmer
and the company the opportunity to stage a "brilliant" turnaround
over the next few quarters, and begin the image of a lean, mean
company agressively going after market share?
Glenn
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| 2015.35 | Subsidiaries are profitable? | MR4DEC::DIAZ | Octavio, SME International | Fri Jul 24 1992 14:01 | 11 |
Re: <<< Note 2015.30 by ROCKT::KUMAR >>>
Remember that each subsidiary is a separate fiscal entity by itself,
and as such they must pay taxes to the local government.
IF the $180M is due to that kind tax, then it tells me that our
international operations as a whole are profitable and what caused
the red numbers is US and corporate costs, but I am only guessing.
/OLD
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| 2015.36 | ADSERV::PW::WINALSKI | Careful with that VAX, Eugene | Sat Jul 25 1992 19:29 | 24 | |
RE: .3 > These results are devastating. $2.8 billion loss for the year? Have > any other companies lost this much and survived? Lots of companies have lost moch more than this and survived. GM and Chrysler, for instance. RE: .28 (AAA bond rating) Unless I'm mistaken, we lost our AAA rating quite some time ago. RE: .34 If you're going to post a big loss no matter what, you might as well put all your financial dirty laundry in that quarter and be done with it. What would be gained by dragging it out over future quarters? The Street had already discounted the stock based on the projected bad financials (note how little the stock moved given such a whopping loss). --PSW | |||||
| 2015.37 | US may soon tax foreign-owned companies on turnover basis | STOAT::BARKER | Jeremy Barker - CBN - Reading, UK | Sun Jul 26 1992 12:11 | 15 |
Re: .33 If Clinton gets elected he plans to bring in a law deeming that any foreign owned company would make a minimum profit based on turnover. This is intended to thwart transfer pricimg policies that some companies use. For example. Company X is based in country A and has a subsidiary in country B. Tax in country A is 10% of profits, in country B it is 25%. Product sold in country B is assembled there mainly using components supplied from the parent company in country A. To minimise the tax paid the price the country B subsidiary pays the parent company for components is adjusted so that the subsidary makes a very low profit, but the parent company makes lots. jb | |||||
| 2015.38 | Where........ | CSC32::JAMI | Mon Jul 27 1992 15:27 | 11 | |
REF .12
Where can the financial results be found....???????????
Note # please...
Ben,
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| 2015.39 | POWDML::GOLDSMITH | Mon Jul 27 1992 15:58 | 2 | ||
VTX Live Wire World News
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| 2015.40 | turning profits into losses | MRKTNG::SILVERBERG | Mark Silverberg DTN 264-2269 TTB1-5/B3 | Tue Jul 28 1992 09:08 | 12 |
One of the more interesting components of the results is the little-
noticed $485M charged RETROACTIVELY to Q1 FY92 results, which brings
the $28.6M net PROFIT in Q1 to a $450M LOSS. I guess the expected
loss in Q1FY93 will look better to investors if compared against a
loss in the previous year's quarter instead of comparing it to a
profit. Interesting financial strategy...who says we don't care what
the Market thinks 8^) Oh yea, we also applied an additional $51M of
expense retroactively to the first 3 quarters to reflect the change
in accounting, with the same results.
Mark
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| 2015.41 | The Damage is Done | SDSVAX::SWEENEY | Rum, Romanism, Rebellion | Tue Jul 28 1992 11:51 | 5 |
It will take years of consistent and increasing profitability and
revenue for Digital to be regarded with the same view by investors as
it once was.
One quarter of profit, or one year of profit will not be enough.
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| 2015.42 | long view? | BOOKS::HAMILTON | All models are false; some are useful - Dr. G. Box | Tue Jul 28 1992 11:52 | 7 |
re: .41
So, what you're saying is that it *is* possible for Wall St.
to take the long view :-)
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