| 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 |
Digital reports fourth quarter profit
(A letter from President and CEO Bob Palmer about the results is
being sent to all employees via electronic mail and is posted in LIVE
WIRE's Worldwide News menu.)
Digital has reported results for the fourth quarter and full
fiscal year that ended July 3, 1993.
For the quarter, the corporation reported net earnings of
$113,196,000 or $.85 per share on revenues of $3,913,951,000. This
compares with a net loss of $1,855,132,000 or $14.76 per share on
revenues of $3,905,784,000 for the comparable quarter a year ago. The
loss in the fourth quarter of fiscal 1992 included a restructuring
charge of $1.5 billion, primarily to be used for employee separations,
facility consolidations, asset retirements and related costs.
For the full fiscal year ended July 3, 1993, Digital reported a
net loss of $251,330,000 or $1.93 per share on revenues of
$14,371,369,000. This compares with a net loss of $2,795,507,000 or
$22.39 per share on revenues of $13,930,872,000 for the comparable
period a year ago. The prior year's loss included a one-time charge of
$485,495,000 for the cumulative effect of an accounting change and a
$1.5 billion restructuring charge.
"I am pleased to be able to report a continued, significant
improvement in our overall operating results both for the quarter and
the full year," said Bob Palmer, president and chief executive officer.
"While I am not satisfied with any loss, my confidence in Digital's
future is fueled by the improvements we have been able to achieve over
the past three quarters. I am particularly pleased to be able to report
that for the three quarters since the new management team has been in
place, Digital has posted a cumulative net profit of $9 million. With
our new customer-focused business unit structure now in place, we are
poised to grow revenues and increase our market share, while continuing
to work diligently to reduce our costs," he added.
"The year just ended was a year of significant change for Digital
and we will continue the transformation of the corporation throughout
fiscal year 1994. Our customers are counting on us to be successful and
to help them succeed. We have leadership competitive products -- both
hardware and software -- from the fastest workstations at any price to
the most robust, open, client/server systems. We offer comprehensive
worldwide service and support for thousands of products, not just from
Digital, but from other vendors as well. As a result, the excitement of
our employees and partners is generating growing enthusiasm in the
marketplace," he said.
"Notwithstanding our concern about the seasonally soft September
quarter, I am confident that Digital is poised for resurgence and the
responsibility is with this management team to make that happen," Bob
concluded.
Bill Steul, vice president and chief financial officer said, "We
experienced slight revenue growth in the U.S. and solid growth
throughout Asia, compared with the fourth quarter of last year.
However, our European business in general was weak, as was true for
many other technology companies," he added. "Most economists do not
look for growth in Europe next year. As a result of the uncertain
economic outlook, we remain very cautious about our ability to maintain
profitability for the seasonally soft first quarter."
"We continue to be encouraged by the results from our focus on
reducing costs. As we rationalized our engineering effort and product
offerings, research and engineering spending declined by 24% or $116
million compared with the same quarter a year ago to be more in line
with competitive norms. In addition, selling, general and
administrative expenses declined by 17% or $215 million compared with
the same quarter a year ago. Capital spending was $529 million for the
full year, the lowest level since 1984," he said. "For the second
quarter in a row, the corporation generated a positive cash flow from
operations and ended the year with a cash balance of more than $1.6
billion."
Bill Strecker, vice president of Engineering said, "During fiscal
year 1993, Digital launched the Alpha AXP systems, and introduced the
world's fastest PC, as well as the fastest workstations at every price
point in the industry. Over 2,600 Alpha AXP software solutions are
available to customers today. Our Alpha AXP strategy continues to
support unified UNIX, Windows NT and OpenVMS operating systems."
"While Alpha AXP-based revenues were a small factor in this year's
results, we look forward to increasing contributions, consistent with
historical trends in the introduction of a new generation of
technology. In increasing numbers, customers, software developers and
systems vendors are selecting the Alpha AXP architecture for their
future computing needs," he said.
"For example, Carrier Corporation, the world's largest manufacturer
of air conditioning, heating and refrigeration equipment, standardized
on Alpha AXP technology for its worldwide manufacturing and engineering
operations."
------
UNIX is a registered trademark of UNIX System Laboratories, Inc.
Windows NT is a trademark of Microsoft Corp.
FOURTH QUARTER ENDED:
JULY 3, 1993 JUNE 27, 1992
PRODUCT SALES $2,085,567,000 $2,143,345,000
SERVICE & OTHER REVENUES 1,828,384,000 1,762,439,000
TOTAL OPERATING REVENUES 3,913,951,000 3,905,784,000
COST OF PRODUCT SALES 1,277,981,000 1,220,059,000
SERVICE EXPENSE & COST OF
OTHER REVENUES 1,060,298,000 1,085,419,000
TOTAL COST OF SALES 2,338,279,000 2,305,478,000
GROSS MARGIN 40.3% 41%
RESEARCH & ENGINEERING 369,376,000 485,241,000
SELLING,
GENERAL & ADMINISTRATIVE 1,088,067,000 1,303,134,000
RESTRUCTURING CHARGE --- 1,500,000,000
INTEREST INCOME 20,081,000 24,447,000
INTEREST EXPENSE 18,091,000 10,664,000
INCOME/(LOSS)
BEFORE INCOME TAXES 120,219,000 (1,674,286,000)
INCOME TAXES 7,023,000 180,846,000
NET INCOME/(LOSS) $113,196,000 $(1,855,132,000)
NET INCOME/(LOSS) PER SHARE $0.85 $(14.76)
AVERAGE NUMBER OF SHARES
OUTSTANDING 133,476,529 125,691,368
OPERATING RESULTS FOR THE TWELVE MONTHS ENDED:
PRODUCT SALES $7,587,994,000 $7,696,029,000
SERVICE & OTHER REVENUES 6,783,375,000 6,234,843,000
TOTAL OPERATING REVENUES 14,371,369,000 13,930,872,000
COST OF PRODUCT SALES 4,464,445,000 4,248,118,000
SERVICE EXPENSE & COST OF
OTHER REVENUES 4,166,946,000 3,883,705,000
TOTAL COST OF SALES 8,631,391,000 8,131,823,000
RESEARCH & ENGINEERING 1,530,119,000 1,753,898,000
SELLING,
GENERAL & ADMINISTRATIVE 4,447,160,000 4,680,822,000
RESTRUCTURING CHARGE ---- 1,500,000,000
INTEREST INCOME 63,831,000 96,176,000
INTEREST EXPENSE 50,837,000 38,517,000
LOSS BEFORE INCOME TAXES &
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE (224,307,000) (2,078,012,000)
INCOME TAXES 27,023,000 232,000,000
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE (251,330,000) (2,310,012,000)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX ---- 485,495,000
NET LOSS $(251,330,000) $(2,795,507,000)
AVERAGE NUMBER OF SHARES
OUTSTANDING 130,408,884 124,864,122
LOSS PER SHARE AFTER TAXES
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $( 1.93) $(18.50)
LOSS PER SHARE ON CUMULATIVE
EFFECT OF ACCOUNTING CHANGE - (3.89)
NET LOSS PER SHARE $(1.93) $(22.39)
BALANCE SHEET/CASH FLOWS - Q4 FY93
CASH & CASH EQUIVALENTS....................... $1,643,195,000
ACCOUNTS RECEIVABLE, NET...................... 3,020,252,000
A/R DAYS SALES OUTSTANDING.................... 69 DAYS
INVENTORIES: RAW MATERIALS........ 331,506,000
WORK IN PROCESS...... 502,200,000
FINISHED GOODS....... 921,434,000
TOTAL INVENTORIES ............... 1,755,140,000
PREPAID EXPENSES.............................. 379,122,000
DEFERRED INCOME TAX CHARGES, NET.............. 84,806,000
TOTAL CURRENT ASSETS.......................... 6,882,515,000
PROPERTY, PLANT & EQUIPMENT, NET.............. 3,178,291,000
TOTAL ASSETS.................................. 10,950,343,000
BANK LOANS & CURRENT PORTION OF
LONG-TERM DEBT.............................. 21,335,000
TOTAL CURRENT LIABILITIES..................... 3,918,714,000
LONG TERM DEBT................................ 1,017,577,000
POSTRETIREMENT BENEFITS....................... 1,128,653,000
TOTAL LIABILITITES............................ 6,064,944,000
STOCKHOLDERS' EQUITY.......................... 4,885,399,000
BOOK VALUE PER SHARE.......................... $36.19
INVESTMENTS IN PP&E - QTR..................... 170,272,000
DEPRECIATION & AMORTIZATION - QTR............. 208,950,000
INVESTMENTS IN PP&E - YEAR.................... 528,691,000
DEPRECIATION & AMORTIZATION - YEAR............ 838,183,000
NON U.S. REVENUES - QUARTER................... 2,449,366,000
OR 63%
NON U.S. REVENUES - YEAR...................... 9,164,148,000
OR 64%
TOTAL EMPLOYEE POPULATION..................... 94,200
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 2596.1 | fiscal trends over the last 7 years | OZROCK::FARAGO | FY94 HW$6B SW$4B Serv$7B | Wed Jul 28 1993 10:08 | 127 |
A few notes: (this is 132 columns)
Percentages reflect change in item to corresponding period in previous year
"Cost of product sales" = Cost to manufacture raw materials into inventory
"Selling, General & Admin" = All other expenses (including sales)
Q1FY93 Q2FY93 Q3FY93 Q4FY93 Fiscal93
Product sales 1,768 -5% 1,967 1% 1,767 1% 2,086 -3% 7,588 -1%
Service & other revenue 1,546 8% 1,722 12% 1,686 12% 1,828 4% 6,783 9%
Total operating revenue 3,314 1% 3,689 6% 3,454 6% 3,914 0% 14,371 3%
Cost of product sales 1,020 12% 1,117 2% 1,050 3% 1,278 5% 4,464 5%
Service expense 1,018 14% 1,058 12% 1,031 7% 1,060 -2% 4,167 7%
Total cost of sales 2,038 13% 2,175 7% 2,081 5% 2,338 1% 8,631 6%
Gross Margin 39% 41% 40% 40% 40%
Research & engineering 405 -2% 405 -4% 350 -19% 369 -24% 1,530 -13%
Selling, General & Admin 1,131 7% 1,177 0% 1,051 -8% 1,088 -17% 4,447 -5%
Restructuring charge 0 0 0 0 0
Total operating expenses 3,574 -5% 3,757 3% 3,482 -2% 3,796 -32% 14,609 -12%
Operating Margin -8% -2% -1% 3% -2%
Interest expense (9) (2) 0 (2) (13)
Income before taxes (251) (66) (28) 120 (224)
Income taxes 10 8 2 7 27
Net income (261) -45% (74) -52% (30) -90% 113 -106% (251) -91%
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 910 4% 1,095 19% 1,023 3% 1,220 10% 4,248 9%
Service expense 893 15% 944 15% 961 12% 1,085 19% 3,884 15%
Total cost of sales 1,803 9% 2,039 17% 1,984 7% 2,305 14% 8,132 12%
Gross Margin 45% 41% 39% 41% 42%
Research & engineering 412 3% 424 5% 433 9% 485 9% 1,754 6%
Selling, General & Admin 1,058 3% 1,181 11% 1,139 3% 1,303 2% 4,681 5%
Restructuring charge 485 0 0 1,500 1,985
Total operating expenses 3,759 22% 3,644 13% 3,555 6% 5,594 15% 16,552 14%
Operating Margin -14% -5% -9% -43% -19%
Interest expense (21) (12) (12) (14) (58)
Income before taxes (445) (153) (291) (1,674) (2,564)
Income taxes 29 3 20 181 232
Net income (474) -1910% (155) -239% (311) -367% (1,855) 113% (2,796) 353%
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
| |||||
| 2596.2 | REGENT::WOODWARD | I'll put this moment...here | Wed Jul 28 1993 11:50 | 3 | |
This is good news, right? Why is the stock going down today?
Kath
| |||||
| 2596.3 | Ask one of those Yuppie WS Analyst | MR4DEC::FLEESE | Wed Jul 28 1993 11:56 | 1 | |
| 2596.4 | Very Simple Kath...... | KBOMFG::TANNER | U2 are Numbed!!!!!!!!!!! | Wed Jul 28 1993 11:58 | 5 |
Kath, Wall street Analysts were predicting an approx $150m profit, so its below
most expectations. Its good news but we still have a lot to do before we turn
round.
-davie-
| |||||
| 2596.5 | SUBURB::THOMASH | The Devon Dumpling | Wed Jul 28 1993 12:15 | 7 | |
I think they were expecting $1.04 a share profit this Q we only turned in 0.85 Heather | |||||
| 2596.6 | Weird logic | ROCKS::SHARMA | Wed Jul 28 1993 12:19 | 9 | |
I really can't understand Wall street Analysts' logic. We show a
profit, they get their prediction wrong - our share price goes down!!!!
IBM show a loss and their share price goes up!!!!
I don't see the logic, maybe some better soul can shed some light
on this.
Perwesh
| |||||
| 2596.7 | GRANMA::MWANNEMACHER | Neck, red as Alabama clay | Wed Jul 28 1993 12:28 | 15 | |
It's called being longsighted. IBM only showed a $40,000,000 operating
loss for their second quarter. The $8,000,000,000 charge was taken to
lay off employees. THis means that IBM's results will show improvement
rapidly if their gross revenues remain stable. IBM has done what it
needs to do and they are going to get it over with and move on.
The expectations were for Digital to do better than they have reported.
Mike
| |||||
| 2596.8 | 16BITS::DELBALSO | I (spade) my (dog face) | Wed Jul 28 1993 12:48 | 8 | |
re: .6, Perwesh > I really can't understand Wall street Analysts' logic. 1) There isn't necessarily any reason to assume logic is involved. 2) You are not alone. -Jack | |||||
| 2596.9 | ??? | MKFSA::FLATHERS | Wed Jul 28 1993 13:00 | 7 | |
So, now that we're in the "black", are the layoffs going to slow down?
I can't believe the new rumors kicking about. Is the goal really
to get DEC down to 60,000 people ???
| |||||
| 2596.10 | GRANMA::MWANNEMACHER | Neck, red as Alabama clay | Wed Jul 28 1993 13:11 | 15 | |
IBM a $60 billion corporation has 302,000 employees. They are going to
reduce to 225,000 employees.
Digital is a $14 billion corporation and has 94,000 employees.
Do the math, you come up with some interesting figures.
Mike
| |||||
| 2596.11 | TEXAS1::SOBECKY | I mean it. Genuinely. Sincerely. | Wed Jul 28 1993 13:18 | 23 | |
re .7
We also took a restructuring charge last year to lay off people;
our stock didn't jump as a result. IBM has just only taken the
chargeoff; they haven't yet 'got it over with'. Also it is a big
IF as to whether their gross revenues remain stable. I heard an
analyst last night say that IBM should stay in the mainframe
business since that business has been paying the bills there for
years.."interesting" analysis since the trend in the industry is
downsizing.
IBM has been the darling of Wall Street for years. We're like the
cousin that nobody likes to speak about. I say, to hell with Wall
St... let's just keep making money and doing the right things for
the customers..the stock price will follow. If we dance to their
tune to closely, they will surely lead us down the garden path to
ruin within a few very short years.
Just my .02
John
| |||||
| 2596.12 | the street... | PHONE::GORDON | Wed Jul 28 1993 13:23 | 6 | |
re: .11
wall streets only interest in any company is can they get the investors
to invest, then wall street makes money.
| |||||
| 2596.13 | NACAD::NISKALA | When will it all end? | Wed Jul 28 1993 13:29 | 3 | |
Was anybody else surprised to see that our employee headcount
was reduced to only 94,100? I was expecting to see the 85K or less
figure. Lots of chopping still to do...
| |||||
| 2596.14 | I'll start my own firm. | MKFSA::FLATHERS | Wed Jul 28 1993 13:30 | 7 | |
.10 , after doing the math, I come up with IBM expecting 250,000
in revenue per employee. If DEC were to do the same, the downsizing
will continue until we're at 55,000 people, approx.
I just love these new standards. for the 90's.
| |||||
| 2596.15 | GRANMA::MWANNEMACHER | Neck, red as Alabama clay | Wed Jul 28 1993 13:33 | 8 | |
RE: .11 I agree about what you have said with regards to the street.
The problem is that we have been managing the business from quarter to
quarter for so long now that it is going to be difficult to readjust
our way of thinking to a stratedgy for the future although I have seen
progress with regards to this.
Mike
| |||||
| 2596.16 | headcount has be baffled | BOOKS::HAMILTON | All models are false; some are useful - Dr. G. Box | Wed Jul 28 1993 13:39 | 10 |
I don't understand the headcount figures either. Palmer specifically
said to get as many of the downsizings done in Q4 as possible. My
understanding of his goal was 85-90K people by July.
Are his reports just ignoring what he is saying, or are we doing
serious hiring, or what? Have I misunderstood the rather
direct communications about headcount?
Glenn
| |||||
| 2596.17 | Downsizing Q4-->Q1 | CSSE::SHAH | Wed Jul 28 1993 13:53 | 4 | |
I think downsizing that occured during later part of Q4 will be part
of Q1 with 7 weeks of pay etc.
| |||||
| 2596.18 | ECADSR::SHERMAN | Steve ECADSR::Sherman DTN 223-3326 MLO5-2/26a | Wed Jul 28 1993 14:07 | 10 | |
Being in the black this quarter at Digital won't stop layoffs. Being
in the red this quarter at Digital won't stop layoffs. In either case,
layoffs will still be seen as the way to improve the situation at Digital
for the next quarter. Finding that little or no improvement of the bottom
line can be expected for the next quarter as a direct result of layoffs
will stop layoffs at Digital.
Just my opinion, of course.
Steve
| |||||
| 2596.19 | need to slow it up | BOOKS::HAMILTON | All models are false; some are useful - Dr. G. Box | Wed Jul 28 1993 14:19 | 25 |
re: -1
I understand that nothing will ever stop the layoffs again; not
only at Digital, but in all probability in any high-tech company.
However, my hope is that we will get to the point where managers
can start doing more careful analysis of *who* gets laid off -- that
is that managers are given the time to carefully analyze performance,
and that the wholesale "slaughter of the innocents" can stop. When you
keep having to lay off *large* numbers in compressed timeframes, you
make lots of bad decisions.
This much at least must be done if people are to regain
productivity and at least minimal morale. People who cannot make
the simplest personal decisions (should I take my vacation or
save it?, should I trade up my house?, should I replace my pickup
with 110K miles?, should I put on that screened-in porch?), cannot
be expected to produce what they otherwise could. Fear as a motivator
only goes so far.
My hope was that we would have reached that point this quarter. I
understood that Palmer was "trying to save 85-90K jobs". We
apparently have not.
Glenn
| |||||
| 2596.20 | ECADSR::SHERMAN | Steve ECADSR::Sherman DTN 223-3326 MLO5-2/26a | Wed Jul 28 1993 14:37 | 14 | |
re: .19
Though I personally and basically agree that managers should be more
careful about who gets laid off, I see Q4 results as reenforcing the
"correctness" of the layoffs that have already occurred. That is,
nobody is going to say, "Ooops, because of the Q4 results it is
apparent to the most casual observer that we should not have laid off
<name_of_resource>." I agree that lots of bad decisions were probably
made, though I tend to lean toward the camp that insists that layoffs
should have been done more quickly and in larger numbers, but that's
another issue. We seem to be in agreement about the end results
and the need to have made better decisions regarding layoffs.
Steve
| |||||
| 2596.21 | Taxes, death and TFSO | AKOCOA::BBARRY | Sand: The enemy of kilted yaksmen | Wed Jul 28 1993 14:40 | 11 |
IMO, we will suffer with layoffs l o n g after we reach the
magic revenue per employee threshold (who knows what that is).
The reason, I believe, is so mgt. can repopulate the worker bee
camps with cheaper help - and in some cases, better/over qualified
workers. Also, contracting part/time, short term to replace TFSO'd
specialists saves the company money too. Its not a career anymore,
now its a job.
/Bob
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| 2596.22 | I hate these guys!! | PHDVAX::RICCIO | A beautiful bunch of ripe banana | Wed Jul 28 1993 14:50 | 23 |
FLAME ON
In response to a lot of the questions/comments about the analysts
and Wall St. in general... There is no logic!
If you remember, about 9 months ago these "pin heads" were saying
if Digital "broke even" in Q4, it would be a huge turnaround, and in
a time frame no one expected. After we showed marked improvement from
Q2 to Q3, some of these "glorified movie critics" were saying Digital
WILL show a profit in Q4. And of course they started putting numbers in
there. Now of course THEY can not be wrong. If we didn't pull in $1.04
per share in Q4 then we did something wrong. It's all shelf fullfilling
garbage. They never admit they over or under estimated their "data".
FLAME OFF
Phil...
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| 2596.23 | recruiting from campuses | MBALDY::LANGSTON | The secret is strong ears. | Wed Jul 28 1993 15:41 | 13 |
re: .21 � The reason, I believe, is so mgt. can repopulate the worker bee � camps with cheaper help - and in some cases, better/over qualified � workers. Also, contracting part/time, short term to replace TFSO'd � specialists saves the company money too. Its not a career anymore, � now its a job. One of the surprising things Ed Lucente said here in L.A. on Monday is that Digital recruiters will be visiting campuses in the Spring. I assume that kids in their twenties are less expensive than the experienced people we're laying-off, right? Bruce | |||||
| 2596.24 | GSFSYS::MACDONALD | Wed Jul 28 1993 15:59 | 15 | ||
Re: .21
> The reason, I believe, is so mgt. can repopulate the worker bee
> camps with cheaper help - and in some cases, better/over qualified
> workers.
An interesting variation of the shake the tree game where the birds
all realight on the same branch. Companies all downsize thereby
"trading" workers for the same job but at lower salaries.
They continue as before but with a smaller payroll. The workers,
however, ...
Steve
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| 2596.25 | HAAG::HAAG | Rode hard. Put up wet. | Wed Jul 28 1993 21:39 | 11 | |
re; continued layoffs
re-read the announcement of a week or so ago about the resumption of
tfso for Q1. the key was the statement about tfso being part of normal
business operations. that says a lot about what dec has become. and
IMHO is says a lot about our inability to manage this company in times
of rapid change. so week by week, month by month, or quarter by quarter
we'll can or hire people as we see fit for that time frame. i figure if
i am not tsfo'd by noon on tuesday, i have a job until at least the
following monday. lucente was recently quoted as saying he wanted
"maximum stability" within his organizations. i wonder what that means.
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| 2596.26 | Read it again | SMAUG::GARROD | From VMS -> NT, Unix a future page from history | Wed Jul 28 1993 23:27 | 7 |
Re .-1
It did NOT say that TFSOing was part of normal business operations. It
said that reviewing TSFO policy was (or something like that). There is
a subtle difference.
Dave
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| 2596.27 | Failure of the American educational system? | ALOSLS::KOZAKIEWICZ | Shoes for industry | Wed Jul 28 1993 23:37 | 5 |
It isn't even subtle. It has more to do with being able to identify
the verb in a sentence.
Al
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| 2596.28 | think about it | ASD::DICKEY | Thu Jul 29 1993 11:09 | 14 | |
re: -.1, -.2
Ok. What is the implication of it being "normal business practice"
to REVIEW plans for TFSO?
How about rewording it (slightly) to read: In keeping with normal
business practices, we are reviewing how many people [if any] we
need to lay-off in Q1.
As mentioned previously, we're in a sorry state when this activity
is part of normal business practices.
Rich
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| 2596.29 | BRAT::GORDIE::CORZINE | Gordie Corzine MKO1 264-2119 | Thu Jul 29 1993 16:38 | 55 | |
I wonder if we aren't failing to see the obvious.
1. Digital has few if any products that enjoy a large market share.
2. Digital has an overwhelming number of different products.
3. Low volume products are inherently low profit, no matter what we
sell them for.
4. Engineers like to make new products, don't like to maintain or
enhance existing ones.
5. Digital abandons new products if they don't sell up to plan.
6. Engineering imagines that the solution for our ills is another new
product.
7. Marketing imagines that the solution for profit is 'value based
pricing'.
8. We never invest in market share.
9. Without market share we can't lure application vendors (ISVs).
10. Without applications we can't increase marketshare and the
downspiral continues.
Am I ratholing? No. One way to reduce the number of products we
develop and sustain is to reduce budgets and headcounts in engineering.
It may even be a good way, given the poor quality of our business plans
in general (tough to make the right choices at a high level).
Face it folks. We need strategy and commitment. If we're going to be
in the Unix market (AXP OSF/1), keep spending whatever we have to,
including low-markup products, etc. to build up our pathetic market
share.
Make fewer products faster, that are closer to what the customer wants,
and improve, improve them. We have to unshackle ourselves from
DECstandards (to some degree) and become more fleet and competitive.
Above all, focus.
Intel and Microsoft are the only really profitable major firms in our
industry today. Compare them to Digital and IBM, fewer products,
higher volume, market share.
At one time Digital was a cookie-cutter efficient manufacturer of
mini-computers. We lost control.
Mr. Palmer and his new team are trying to do the right things to make
us profitable again. At least it's a begining. The old days are gone.
I for one, don't like working for a company that is unable to return
reasonable earnings to the stockholders. That's anything but secure.
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| 2596.30 | HAAG::HAAG | Rode hard. Put up wet. | Thu Jul 29 1993 21:18 | 5 | |
ok. i don't want to get into a "play on words" game. but i think it's
fair to admit that this company is now going to evaluate tfso on a
quarterly basis, IMHO more regularly, and execute accordingly. in my
book, that constitutes "normal business practices". more stick. and
less carrot.
| |||||
| 2596.31 | how's it go? Information is power? | BOOKS::HAMILTON | All models are false; some are useful - Dr. G. Box | Fri Jul 30 1993 15:17 | 38 |
The thing about periodic layoffs is that there has to be enough
information given to employees so that they can do some minimal
level of planning.
Here in the Northeast, there were two companies who were notorious
for periodic layoffs: Raytheon and Honeywell. It was axiomatic
that if you went to work for one of those companies, you'd face
a layoff at some point.
The advantage, though, was that you knew the criteria (for the most
part) by which those layoffs would occur, and, importantly, *where*
they would occur (let me add that I worked only briefly for Honeywell
after they bought the company I worked for and never for Raytheon,
but I have had close friends who did). If Raytheon missed a big bid
on a defense contract, you knew that some number of layoffs would
follow. You could therefore plan accordingly. If I was working on
the WidgetWoman missle system, and the secretary of defense cancelled
it, I knew I better not buy that new jeep. I think the reason for
that was that that was how Raytheon did business, and everyone knew it.
Until recently, Digital has not been that type of employer. What needs
to happen now is that the SLT needs to come out with some hard,
published truths. If we don't make X revenue number during Q1, we
will need to layoff x number of people. Out goal is to get to *at
least* IBM's revenue per employee number, and we will continue to
lay off until that threshold is reached (for example). If we don't
sell n Alpha systems, by Q3, the company will need to undertake a
major downsizing. If any of the above "goals" aren't met, then we
will be laying off people without z skills, and will be getting of
out of y businesses.
Anything that allows employees to make intelligent career choices would
be helpful. *Any* hard information would be most welcome by this
particular employee.
Glenn
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| 2596.32 | HELIX::MAIEWSKI | Fri Jul 30 1993 18:08 | 44 | ||
RE <<< Note 2596.29 by BRAT::GORDIE::CORZINE "Gordie Corzine MKO1 264-2119" >>>
> Am I ratholing? No. One way to reduce the number of products we
> develop and sustain is to reduce budgets and headcounts in engineering.
> It may even be a good way, given the poor quality of our business plans
> in general (tough to make the right choices at a high level).
Although this seems like the popular idea of the moment, it is a really bad
long term strategy. The problem is not one of having too many engineers, the
problem is that engineers are no longer doing engineering.
My American Heritage Dictionary defines Engineering as "The application of
scientific principles to practical ends as the design, construction, and
operation of efficient and economical structures, equipment, and systems." The
problem is that we are no longer asked to do that.
We keep hearing that we should listen to the customer and sure enough
marketing people go out and listen, but by the time the customer's words get
back to engineering it's been filtered down to a parts list. Even the articles
somehow get removed "Customer wants SCSI on new Gyzmo-bus".
What's missing is a detailed description of the customer's problems so that
engineering can apply scientific principles to solve those problems. In other
words, the wrong people are doing the listening.
I once heard that when K.O. and the founders of Digital 1st went to talk to
some people in power plants the customers asked them for "digital" control
systems for their equipment. Because our engineers were there looking at the
problem itself, they were able to see beyond the immediate request and envision
a totally new idea, small limited general purpose computers that would solve
the customers problems better better than control boards they originally wanted
to buy.
We won't get market share by taking customers parts lists and asking our
engineers to build what's already out there based on the technology of the
80's. If we want to return to being a leader in this industry we should get a
step ahead of our customers and lead them toward new solutions they have not
even comprehended just as K.O. and our founders did years ago.
By doing that, the latest scientific principles could be employed where it is
appropriate and products could be built that people will want to buy during the
mid to late 90's and into the next century.
George
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| 2596.33 | We can only succeed if we're told what it *takes* to succeed | AUSTIN::UNLAND | Digitus Impudicus | Fri Jul 30 1993 18:19 | 26 |
re: .31
> What needs to happen now is that the SLT needs to come out with
some hard, published truths.
I agree completely, but I have my doubts. Having met Bob Palmer before
he became CEO, I thought he was a pretty forthright and down-to-earth
individual. But given his recent communiques to the field, I still see
the same syrupy-treacle words that we got from the previous bunch. I
still have to go through every message and translate it to plain English
to know if we are doing good, bad, or indifferent. There is still no
indication that management understands what is happening to the lives
of the employees, or how the situation effects the performance of the
company as a whole.
Every day, I see more and more situations where Digital is losing
business, squandering customer goodwill, and missing opportunities.
It's not because the employees are malicious or negligent, or even
just plain incompetent. It's because they are exhausted, shell-
shocked, and lack continuity of purpose and resources. There are
few rewards left for working at Digital, just the realization that
the ultimate penalty make strike at any time. Management has to
change that situation, or the company will not survive in anything
approaching it's current form.
Geoff
| |||||
| 2596.34 | Words that need to be listened to....... | SPECXN::KANNAN | Fri Jul 30 1993 18:22 | 31 | |
Re.32 >>>>> We won't get market share by taking customers parts lists and asking our engineers to build what's already out there based on the technology of the 80's. If we want to return to being a leader in this industry we should get a step ahead of our customers and lead them toward new solutions they have not even comprehended just as K.O. and our founders did years ago. >>>>>> Thanks for saying it so clearly, George. I hope someone's listening. We are Digital because we made PDPs, DEC10/20s and the VAXES with concepts way ahead of their time. We are doing it with the Alphas also. But the way we thought about why they were successful is the one that misleads us. It's not the beauty or the cabinet or the speed of these systems that made them successful. It's what they made possible; inexpensive local computing with PDPs, Time sharing with DEC10/20s and a smooth seamless growth path with VAX/VMS systems. But we need to realize that it's the age of reasonably open OSs, networks, distributed computing and helping the customers make sense of it all with all kinds of services. Raw speed alone doesn't cut it. We need to think in terms of "solutions" that combine all of the above in ways that blows the customer's minds and have them say "Can I do That?!!". Nari | |||||
| 2596.35 | KAOFS::S_BROOK | DENVER A Long Way | Mon Aug 02 1993 17:20 | 6 | |
re .29
Low volume products are not necessarily unprofitable ... In fact
some low volume products can be highly profitable.
| |||||
| 2596.36 | We can't be everything to everybody | AUSTIN::UNLAND | Digitus Impudicus | Mon Aug 02 1993 20:02 | 16 |
re: .29 "... low volume products can be highly profitable."
This statement is true, but the reality is that our industry, our
overhead structure, and our current lack of innovation all make it
very difficult for us to sustain a profit on low-volume products.
In some cases, there are groups within Digital that claim to show
profits on low-volume or niche products, but on further examination,
the Company as a whole is losing money selling and supporting the
products. Over the years, several groups have managed to survive
mainly at the expense of other organizations because of faulty
metrics, leaving the Company bleeding red ink. Those practices
have to stop, and if it means we abandon some low-volume products
that *could* have turned a profit (real profit) so be it.
Geoff
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| 2596.37 | 16BITS::DELBALSO | I (spade) my (dog face) | Tue Aug 03 1993 21:56 | 28 | |
re: < Note 2596.29 by BRAT::GORDIE::CORZINE "Gordie Corzine MKO1 264-2119" >
> 4. Engineers like to make new products, don't like to maintain or
> enhance existing ones.
> 6. Engineering imagines that the solution for our ills is another new
> product.
To reinforce what George and others have said, I must also conclude that you
have a rather narrow and warped view of Engineering's perspective with
regard to how we should be doing business. The above statements couldn't
be farther from the truth with respect to any engineering organization I've
worked in over the last 16 years.
re: Wall Street Analysts
Correct me if I'm wrong, which is quite likely since I don't have sufficient
interest to be a steady reader of INVESTING, but aren't stock prices, like
real estate prices, more clearly a reflection of what major investors are
willing to buy or sell at, rather than what the pimply-pussed analysts
publish? Yes - I recognize a relationship. But how many holders of large
blocks of stock are actually paying attention to the analysts? I always
thought the analysts gained (and lost) credence based on the "accuracy"
of their predictions, which was a function of what the market actually
did after they said sooth.
-Jack
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| 2596.38 | From another engineers perspective... | TPSYS::BUTCHART | TNSG/Software Performance | Wed Aug 04 1993 08:59 | 20 |
re .37 on .29
> 4. Engineers like to make new products, don't like to maintain or
> enhance existing ones.
> 6. Engineering imagines that the solution for our ills is another new
> product.
I've been in Digital going on 20 years, most of them in Engineering. I
think there's a fair amount of truth in statement 4, at least in the
software world. Most of the engineers I know like new stuff (although
a neat enhancement of an existing product often qualifies). I've been
through "forms wars", "database wars", "TP monitor wars". I've also
participated in a couple of working groups where the near knee-jerk
reaction by a number of engineers to "We have too many products that do
variants of X!" WAS "Ok, we'll create a NEW product...". So there's
also some support for statement 6, as well.
/Butch
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