Conference 7.286::digital

    I read the article last night. It is an absolute disaster. It is the
    most negative article I ever read about Digital.  In my opinion, it is
    too negative. Only time will tell...
    
    Phil

    I also read it...the picture of Bob Palmer looking very pensive, hand
    to mouth, glitzy ring shining on finger didn't exactly create an image
    of strength.  This is the latest in a series of unflattering photos
    of Mr. Palmer in the recent past...remember the painted into the red 
    brick corner..all sorts of symbolism.
    
    mark
    

    It may be very negative, but we currently ain't very pretty 8*)  The
    suggestions on how to resolve the problems and get back on track are
    ones we've heard & talked about before.  Maybe we just need to get on
    with it.
    
    Mark
    

    The picture of Ken Olsen looking like he just stepped out of la-la land
    isn't all that flattering either.
    
    Larry
    

    Remember the buttons that read "Are You In the Canoe?" that were made 
    up by the company in order to create a team approach to that article on
    Ken?
    
    

    The article is big, but here's the recommendations in "How to fix DEC"
    section:
    
    "* Focus On Strengths in computers, networking, and software development
      tools- areas where DEC products remain superior.  Invest in high
      growth and profitable operations such as networking gear and
      workstations.
    * Sell Businesses such as database software, application software, and
      printers where there is no leadership position.  Consider closing
      or selling unprofitable systems integration business.
    * Develop a Clear Business Strategy- not a technology plan- that
      customers and employees can understand.  Then, communicate the
      strategy clearly.
    * Slash 40,000 Positions to get costs in line with industry profit
      levels, including 1/3rd of the 6,000-person sales force.  Assign
      remaining sales reps to top 50 customers in key markets.  Use dealers
      for the rest.
    * Sell the Alpha Chip Plants to a chipmaking company such as Advanced
      Micro Devices"
    and also from the article:
    "Throw the low-margin PC business into a joint venture with another
     company."
    
    One other tidbit: "During a tense board meeting on Apr. 21... Chief
    Executive Robert B. Palmer offered to resign"
    
    copied without permission  kb

    
        RE .7
    
        Wrong target with "slash 40,000".   Time long overdue to 
        slash 40,000 Wall Street analysts.  Put them on the street 
        and, understand unemployment, and report back on how one  
        creates customers for products by putting people out of 
        work.   Just get everyone to do local minimization and 
        wonder why the whole thing sinks.
    
        After all, it's so simple:  If the revenue per employee is 
        bad, just cut the denominator, and of course the numerator 
        will stay the same, and everything will be fine.  And when 
        that doesn't work. just do it again, and then again.
    
        Right?  Wrong.
    
        Peter
    

    As Peter implied there is a point beyond which cutting must not be
    done.  Yes, cutting can make the revenue per employee look good, for
    a while, until the lack of resouces (people) causes the company to be
    unable to deliver the goods, which results in loss of revenue etc. etc.
    
    Of course the key is to increase revenue, not cut people.
    
    Jeff

    
    I just got my 5/2 copy of BW and there's not really a main article
    on Digital Equipment. There is the main cover story on DIGITAL
    PIONEERS (No mention of Digital Equipment, however ;-( ). Digital
    Equipment is listed in the back, as mentioned in articaled starting
    on page 28 (The good, the bad, and the unknown) talking about quarter
    profits/loses reported. Yes, we are there, in gory details as the
    only company listed in the Technology section that posted a loss.
    We are also listed as being mentioned on page 42, which is an article
    on South Africa (just scanned, and didn't see any mention of Digital
    Equipment).
    
    I went back and looked at my 4/25 copy of BW (Hedge Funds stuff on
    the cover). No mention of Digital Equipment at all in the back of the
    mag.
    
    What's the date on the cover of BW with this article in it ??
    
    Thanks,
    Randy
    
    

    re -1 
    	may 9,1994
    
    there will be no doubt that you have correct one when you see it

    
    i just finished reading the article.. it was pretty brutal to say the
    least. It doesn't hold out very much hope for us. I didn't find it par-
    ticularly enlightening however I found it pretty much on the money. There is
    nothing in this article that hasn't been discussed here at one point or
    another. It does however portray us as being in a worse financial
    position today than we were in prior to BP taking over and that we are
    in pretty desperate shape. Not something to read if you are trying to
    get your spirits up.
    

    r.-1 Yes, that was pretty much my opinion also. They give us like 
    zero hope. I really don't understand why hp can hang in there through
    tough times with their peripheral buisnesses and we with the
    (questionable) loyal customer base can't leverage our way through this
    tough time.  Anyway l view alot of this as good will. We had loads of
    it when I can on board in 1984. Since KO left it seems like there is
    nothing (perhaps DCU) that is sacred to DEC. With the mindless and 
    seemingly directionless layoffs, the monsterously awful debacle of the
    Decstation/osf cancelationl, the charming little pay-raise contraversy
    of a year ago and on and on... Its a miricle if anyone has any good
    will left for DEC. Weather its DEC for its employees or DEC for its
    customers one has to ask which is really important? 
    
    If I ever were tohear anything like a pep-talk from the people running
    this outfit I'd probably have hope. This Enrico guy seems to have
    something I like to  hear but thats the first and we've had an awfully
    long 2 years.
    
    Fred Mudgett

    re: .15  and our customer loyalty ...
    
>    I really don't understand why hp can hang in there through
>    tough times with their peripheral buisnesses and we with the
>    (questionable) loyal customer base can't leverage our way through this
    
    What's really ironic about this is that Digital has one of the most
    loyal customer bases in the industry. We have lots of die-hard fans
    who cheer us on, and who truly love our products. But they can suffer
    only so much punishment.
    
    Digital has inflicted the "Death by a Thousand Cuts" on customer
    loyalty. The competition has become a factor only because Digital
    allowed them the opportunity. And the process continues. I could
    catalog the inanity and indignity we have heaped upon our customers 
    here, but it really boils down to two things:
    
    Digital didn't listen to the customers or the market; and
    Digital didn't care about earning a profit.
    
    We thought that we didn't need to listen to the customers, because we
    had all the answers. We could tell them what to do, and they *had* to
    do it, because we were *always* right.
    
    And we thought that profits were guaranteed, because we were *Digital*.
    Profits would show up no matter how we screwed up, or how ineffective
    our management was. Our products were so good, we *deserved* those
    profits, they weren't something that we had to earn every single day.
    
    Those days are over, but the memory and the attitude lives on. A day
    doesn't go by where I don't here someone at Digital tell a customer
    that Digital has the solution; by the way, what was the problem?
    
    Geoff

    Could someone post the article?

    Re .14
    
    I also SORT of found it "on the money". Where I differ (oh, i am ever
    the optimist!) is that I believe we WILL return to profitability, in a
    fairly big way, through some fairly simple processes. The PC business
    is growing, and profitable (albeit at lo gross margins). The Storage
    Business is growing rapidly, and is profitable. The Components and
    Peripherals Business is (I believe) in a similar position. MCS must
    manage resources to remain profitable in a declining HW business. DCS
    may FINALLY be able to compete with others without a manufacturers
    overhead being allocated. So, that leaves the SBU. IMHO, the Sable
    represents the first of a new breed of cost-effective (to build AND
    buy) line of systems. As the market get's increasingly more
    sophisticated, we'll see these going through MANY different channels
    addressing the WNT and UNIX markets. I think (FERVANTLY HOPE!) to see a
    revival of the OpenVMS business on this (and followon) platforms.
    
    Assumptions in the above- We MUST fix our internal systems (I'm
    familiar with those that us field-jockeys/peddlers use) to allow us to
    operate much more effectively/quickly/autonomously. Integrated "info at
    my fingertips", integrated forecasting/contact/time managemnent,
    improved JIT with 99% accuracy on order fullfillment, etc, etc, etc.

What kind of article would *you* expect from a guy that bought Digital @ $190???

:-)

Rick

>    Digital didn't listen to the customers or the market; and
>    Digital didn't care about earning a profit.
>    
>    We thought that we didn't need to listen to the customers, because we
>    had all the answers. We could tell them what to do, and they *had* to
>    do it, because we were *always* right.

Huh? We have very satisfied customers... we have years of survey scores
to prove it!! <insert derisive laughter here>

Lee

    re: .12
    
    So, Digital was the only Technology listing that posted a loss ... 
    Reminding myself that early on while we were posting losses, we
    were blaming it on the economy.  Apparently the economy is much better,
    but we are still posting losses.  On the up side, I believe we've
    proven beyond all reasonable doubt that it is possible to maintain
    consistent results in a changing economy ...  ;^(
    
    Steve 

>    zero hope. I really don't understand why hp can hang in there through
>    tough times with their peripheral buisnesses and we with the

	This is not the first time I read this kind of stuff about HP.
	The computer world has changed. HP will widely pass the 20B this year.

	If my memory is good when we reached the 13B, HP was a 9B business. 
	Are we going to pass 14B this year? I do not think so.

	Do not tell me that this is done thru peripheral buisnesses. Their
	medical and instrument stuff account for very little of these 20B.

	I know two clericals in HP. Their jobs are going to dissapear in
	6 months (their year end). To handle this, their management already
	built a plan involving some changes for 5 other people. They are 
	moving temporarily to full time, reorganizing groups, changing the
	tasks, ... of 7 people to accomodate a smooth transition for 2. All
	this is done in a coordinated manner, CONSULTING each individual, 
	ASKING for motivation...

	Here we close the building, move the people who want to move and
	ask them to fish for a new job, when they have a desk and a chair
	they must consider themselve as well treated. Sorry if I exagerate
	but I witnessed some weird stories around here.

Back in '84, '85, and '86, Digital's Sales force was the worst in the industry
(not), HP was laying off people, IBM was closing down plants to reduce their
work force, and Wang, DG, and Prime were coming after us in a big way.  The 
big shake out was coming, remember.  Look what all of these companies have had 
to do over the last few years.  It's our turn in the barrel because we're 
turning over our technology. 

When Digital was trying to ramp up VAX sales in the early '80s, we still had
the PDP and DEC 10/20 product lines to draw revenue from.  Today, we have VAX,
storage, and PCs.  But the margins aren't the same.  We won't get out of the 
barrel until all of the applications that customers know and love, and some
they don't know about yet, are available and stable on Alpha AXP.  That day is
very rapidly approaching. 

Although having 5000+ applications shipping on Alpha AXP is great, there are
probaly less than 100 critical applications that are required to draw
enough customer attention cycles to ramp up the business.  These applications
are in the scientific, design, manufacturing, finance, tp, and office automation
markets. Most of those applications are available on OpenVMS for Alpha AXP, 
but that's not where the customers want them. Nearly all of them (or their
open, distributed, object-oriented, client/server progeny) will be available 
on OSF/1 in the next few months.  With SMP, VMS and UNIX clusters, and NT, 
we'll be able to take on any competitor and win on price/performace, 
availability, data integrity, and scalability.

Sales cycles aren't what they used to be either.  You can't re-engineer a
company over the weekend.  No one implements a new finance system, an MRP, 
trains 5000 users on a new mail system, or acquires 5,000,000 subscribers 
overnight.  Start preparing your customers and business partners to implement 
this technology now.  Pilot projects, test drives, porting projects.  
Start small and grow.  In six months the technoloy will be here and they will 
be behind the curve.

I am seeing these applications today.  The technology is being tested.  We
going to come out of the barrel on a ballistic trajectory this summer.

Too optimistic?  Maybe.  It beats the alternative tho.

MS

>>      <<< Note 3038.24 by MRKTNG::SLATER "Marc, ASE Performance Group" >>>

>>Sales cycles aren't what they used to be either.  You can't re-engineer a
>>company over the weekend. 

I think that, at least from the field's perspective, we aren't "re-engineering"
the company, merely downsizing it.  While we give lip service to such efforts
as the Customer Value Chain, it's all smoke and mirrors thus far.

You can't make an elephant into a gazelle by slicing away pieces of the 
elephant.

<<< Note 3038.25 by POCUS::OHARA "Reverend Middleware" >>>

>>      <<< Note 3038.24 by MRKTNG::SLATER "Marc, ASE Performance Group" >>>

>>Sales cycles aren't what they used to be either.  You can't re-engineer a
>>company over the weekend. 

|I think that, at least from the field's perspective, we aren't "re-engineering"
|the company, merely downsizing it.  While we give lip service to such efforts
|as the Customer Value Chain, it's all smoke and mirrors thus far.

|You can't make an elephant into a gazelle by slicing away pieces of the 
|elephant.

My statement had nothing to do with Digital's re-engineering, down-sizing,
or lip-service.  I'm talking about customers who are re-evaluating their
information technology and infrastructure.  The customers will continue
to re-engineer their companies with us or without us.  If we keep waiting
for the "Customer Value Chain" or "Marketing" or the "Senior Leadership
Team" to solve our problems then the barrel will quickly fill with paper.

What will solve our problems is talking to customers and describing to 
them how Digital can help solve their business problems with our technology,
business partner applications, and people.

Forget about Digital the organization, it will take care of itself for better
or worse.  Focus on mapping Digital's technology to customer's business 
problems.  

With a little luck, Digital the organization will always be trying to keep up
with the needs of the people in the field, and we'll be back here next year
complaining about how the Customer Value Chain can't solve the new problems 
that the field faces.

    Already getting customer comments and snide remarks about the article.
    
    It looks as though we are getting such poor press imo because we
    severely pissed off Wall Street (Lucente) predicting break-even just
    before the $183M loss.  If predicted correctly, we probably wouldn't be
    feeling so much down on DEC pressure from the analysts.
    
    ..Larry

    well, if we have bad press on us out there, how come we dont go
    and write a good article on us and put it out there in some big
    magazine or paper?

    we dont have shortage of excellent writers in DEC (the 744 of us is just
    a sample), it just boils my mind that we DECeeees would just sit like this
    and let them out there write anything they want about us and we dont do
    anything about !

    the pin is mightier than the sward, and it is high time we DECeeees 
    use our pins and write to every paper and magazine who writes bad
    things on us to complain and tell the truth.

    \nasser

    Small condolence, but BW has a history of showcasing companies
    at their "peak", and their articles end up as being contrarian
    indicators.  In other words, if there's a good article (especially
    a cover feature) in BW about a company, it usually means that's
    a good time to sell their stock.  Likewise, a bad article is
    often a sign that it's a good time to buy.  It's sort of a
    longstanding joke in the investment community.  kb

    re .28
    
    I don't believe any words from Digital to the press (with the exception
    of a clearly articulated statement of our mission, strategy/plan to get
    there, and a commitment not to reverse course in 6 months) will have
    any meaning at this point.
    
    I BELIEVE WE NEED TO SHOW RESULTS (AND AS I SAID IN .18, IMHO WE WILL!)

    Well, I just got my first blast from the BW article.
    
    A customer finally decided to buy some Alpha WS's through a VAR.  After
    he read the article he is trying to talk the VAR into running the
    application on another platorm.  God, as if it wasn't tough enough!!
    
    Ken
    
    

    
    re .29
    
    I've heard the same thing about sports teams being featured on
    Sports Illustrated when they are playing well...Their streak abruptly
    ends. 
    
    Also about celebrity couples that are featured in People magazine.
    Right after the magazine shows how much "in love" they are they file
    for divorce.
    
    Maybe it's because these magazines tend to focus on (and attempt to
    amplify) the sensational without really taking a hard look at
    information that could be contrary to the position they are taking in
    the articles they write. So a company that's in a little trouble is
    dead, a team that's on a winning streak is unbeatable, and a celebrity
    couple that "looks" happy (remember most of these people are ACTORS)
    will stay together forever. 
    
    There's hope for us yet.
    
    Steve B.

    BW in it's recommendations talks about losing 40,000 and in BP
    Apr 28 letter to employees he talks about "sharply reducing our
    population and limiting or giving up participation in markets that
    are promising but not essential to our success."
    
    In this notes conference and others it is widely understood that you
    cant just reduce headcount to become profitable.
    
    So far I've heard about lots of head count reduction and now BP
    infers that we are going to chop off entire business units but aside
    from the increased use of VAR's and OEM's nothing has changed about
    our processes or the way we do day to day business.
    
    Does the BW article say why we should lose 40,000 or is that just
    based on the $/employee figures ?
    
    Any idea what business units will get the axe ?
    
    
    Brian V
    

    Without reading BW is there anything in our Research & Development new
    coming to the table as far as products are concerned. As was mentioned
    we can not continue to cut heads to become profitable again. If there
    is nothing on the table to eat we shall all starve!!!

Long ago, KO said he alsways resisted layoffs because when the turnaround
came, DEC would need the people.

To rephrase this a bit... Digital is not going to turn around until we
end layoffs. Typically, a demoralized and demotivated workforce do not
work miracles, which is what Digital needs right now.

The 3 biggest morale killers have been:

1) Never-ending threat of layoff

  Layoffs should be a temporary business solution, not a standard
  operating policy which now seems to be the case.

2) Constant reorganization

  No comment event needed for this one.

3) Lack of vision 

  Prov. 29:18, "Where there is no vision, the people perish." Most of the
  employees do not have a vision of where we are going, as a company...
  or a clue as to how they are a part of it, if there is one.

Just one or two of the above is posion enough... all 3 make for a deadly
combination.

The real killer is, most of the 'individual contributors' (worker bees)
identified thses toxins long ago... just as a review, look how long we
have been talking about layoffs:

Notes> DIR/TITLE=LAYOFF

--------------------------------------------------------------------------------
                           The Digital way of working
Created: 14-FEB-1986 20:02         3051 topics        Updated:  4-MAY-1994 10:00
     -< DIGITAL INTERNAL USE ONLY � Read-only Copy - Real Copy on HUMANE >-
 Date         Repl  Title
---------------------------------------------------
23-JAN-1990    54  DEC Layoff Rumour published in DECUSCOPE
 4-JAN-1991   154  First ever Digital layoffs
10-JAN-1991    21  A question around the "layoff"
 4-FEB-1991   219  Note 1361.0/Instant layoffs
 6-MAY-1991    89  The Reality of Cost Controls and Layoffs?
 8-JUL-1991    38  Layoff Process Memo to Ken Olsen - and Response
 9-JUL-1991    61  Layoffs lose us the wrong people
29-JUL-1991    32  Post-layoffs: Ideas for returning to 'normal'
13-AUG-1991     4  Management and Layoffs
 4-OCT-1991    20  Layoff Humor?
 9-APR-1992   143  Layoffs to be reinstated in May 1992
16-JUN-1992    28  Les layoffs
17-JUN-1992   908  FY93 layoff,package rumors!
23-JUN-1992    14  projects cancelled, now layoffs?
10-JUL-1992    40  Layoff a bad business decision?
27-JUL-1992   157  Digital Stinks Because It Screws Up Layoffs
 2-AUG-1992   218  Layoff central
18-AUG-1992    43  Future Layoff Plans
11-NOV-1992    58  Dec 7th layoffs (bombs away!)
 1-MAR-1993    96  Avoiding a Strike over Layoffs in Germany
17-MAY-1993    23  TNSG layoffs
22-JUN-1993   105  FY94 layoffs planned
20-OCT-1993    44  We need a vision, not another layoff
30-MAR-1994    32  Heard from Europe: Digital France layoff cancelled


The turnaround of Digital Equipment Corporation, if there is ever to be
one, hinges on the construction and communication to all employees a
clear plan of action, and then the implementation of the plan. Mere talk
and hype will no longer suffice.

Lee

>>The turnaround of Digital Equipment Corporation, if there is ever to be
>>one, hinges on the construction and communication to all employees a
>>clear plan of action, and then the implementation of the plan.
Right, these are exactly the things Mr. Pesatori's memo addresses(3023.15).
Its my feeling that this is the *first* good news from the ozone layer since
the beginning of DECs trouble. Id be very inclined to give the guy a break.
If you have any specific suggestions Id forward them to his office.

re Note 3038.32 by ASDG::SBILL:

>                        -< Maybe the opposite IS true... >-
  
        OK, you gave some examples of celebrity at a peak coming
        before a fall -- what about some examples of "doom articles"
        coming before a strong recovery?

        Bob

The one point that struck me as I read the Livewire piece, "Pesatori 
promises clear direction", was the statement he made.

	"It will be my expectation that within a couple of months, we
                                                 ^^^^^^^^^^^^^^^^!
	should be able to state...what is our strategy...plan of 

	execution...and...timetable.."

I am hopeful that Mr. Pesatori will help lead us out of this, and I don't
expect him to be any more a miracle worker than anyone else, but can we afford 
to take that long to set and communicate what we are going to do?

We dont need a miracle worker...never have as far as I can see.
We do need someone with a reasonable plan who is able to clearly
communicate it (to the grunts and customers) and then help us (grunts)
get on with the execution of it. Mr. Pesatori has done all of the above
in the PC division...now lets give him a chance to do the same company
wide. If he succeeds then great, if not then what have we lost? I think
2 months compared to the time spent floundering already isnt much. Lets
give the guy some slack and more importantly our support.

two months is reasonable.  After all it only took him 6 weeks to turn the
PC business around with a plan.

In the Palmer DVN, today, he said two things:

paraphrasing
"We need to get down to 65,000, from the current 85,000, to be on par with IBM 
and HP in the profit per employee department."

Then later, I can't remember the context, again paraphrasing
"find a way to have 25-30,000 fewer employees"

Bruce

    Actually, the business week headline (at least) referred
    to a company called "DEC".   As we all know, this here
    is "Digital".

    Where is the BW article that was posted in here?
    
    REK

    	I think it's interesting that BP wants to layoff 20,000 people (30%
    of the current employee population) in order to improve the
    revenue-per-employee number, bringing it more in line with that of HP
    and IBM. I agree that it would be nice to improve this metric, but is
    the SLT naive enough to think that revenue will remain steady while
    costs decrease with 30% fewer people? Also, I listened to the DVN
    broadcast, but I didn't hear a timetable for this headcount reduction.
    Did anyone else hear this or read it somewhere else?

    I suppose finding a way to increase the revenue to improve the ratio is
    too radical...
    
    Laurie.

    R.47 and reducing headcount, and putting bits together from what I
    remember of his talk.
    
    The reduction of 20,000 headcount will be a mixture of 'terminations'
    (there's a sensitive word!!) and selling off non-core elements of the
    business.  BP didn't actually say what the non-core bits will be... so
    that means we can all continue worrying.
    
    As for when?  He was clear that he's working to a goal of profit by the
    end of the calendar year -- yes I know he hoped for profit in Q4, but
    he seemed more confident when he spoke of calendar year-end.  That
    means something has to happen with the revenue and/or with the cost
    structure between now and 1995.  The implication must be that some of
    the terminations and sell-offs will be complete by 31 December 1994 --
    sounds like a Happy Christmas in prospect for lots of DECcies.

    
    I watched (and listened) to the DVN yesterday.  First, I thought it was
    Mr. Palmer's most candid effort to date.  Second, and distressing to me, 
    I heard him distinctly state that he'd rather Digital be a profitable $10B
    company than an unprofitable $14B company.  It seems the headset is to
    still cut our way to profitability and not focus on generating revenue. 
    Given the resistance I have been receiving to proposals for revenue
    generating programs, it's clear that sentiment has trickled down
    through Digital management. I am convinced that if the employee base 
    (and, by that I mean individual contributors) were empowered to go generate
    revenue, without massive interference from Managers trying to "add value" 
    all the time, this company would be profitable as a $14B company.  
    That's what I'd rather be, a profitable $14B company, which I think is
    realistic and possible. I think the analysts and Wall Street have
    convinced Digital management that we can only be a profitable $10B
    company, and we are fulfilling that prophecy by not attempting to
    generate revenue.  
    
    That's my honest $.02, now back to our regularly scheduled program.
    
    Al
                     

    
    
    We wouldn't need as many people if our tools (systems, P's $ P's and
    offerings) were simplified and worked efficiently.  Slashing the
    headcount without fixing the real problems will do nothing but create
    more problems.
    
    
    Mike

    At this point in time we do not have the systems in place to replace
    20,000 people. We have systems that don`t talk to each other so
    transactions are redundant. I was somewhat surprised at the currency
    difference. Of the 10% lost 8% was curancy differance???? and only 3%
    was actually lost.

RE. .50

   >"...Given the resistance I have been receiving to proposals for revenue
   >generating programs, it's clear that sentiment has trickled down
   >through Digital management..."

What do you mean??

    I did also hear him refer to reducing the headcount of 85,000 "REGULAR
    EMPLOYEES".   Has anyone looked aroung and counted the "irregular
    employees", the ones Wall Street seems to think is OK.
    
    Any chance we are apoproacking 5-10K Contractors across the company ?
    

    I heard there was 8,300 temps at Digital. I think we have 6-10 here.

    re .55
    
    According to the Q3 official results, head count the population is as 
    follows:
    
    Employee Population:  Regular..................              85,700
                            Other..................               6,300
    
    at end of Q2 FY94, the numbers were
    
    Employee Population:  Regular..................              87,500
                            Other....................             4,800
       
    
    

re: .58

Are you referring to the IM&T systems these folks have to use?

- paul

re .44:

>paraphrasing
>"We need to get down to 65,000, from the current 85,000, to be on par with IBM 
>and HP in the profit per employee department."


From LIVEWIRE:

         If you look at the implications of achieving a competitive 
   position at our current revenue levels, the metric of revenue per 
   employee suggests a company of 65,000 people -- or fewer.  Today, as 
   you know, we have about 85,000 regular employees.  We must achieve a 
   competitive cost structure as rapidly as possible.  And even if we are 
   fortunate to achieve a reasonable growth in revenues, we cannot escape 
   the fact that significant additional downsizing is unavoidable.  
   Failure to act promptly will result in a greater loss of employment.  
   In fact, the entire enterprise could be at risk.

>Then later, I can't remember the context, again paraphrasing
>"find a way to have 25-30,000 fewer employees"

From LIVEWIRE:

   I started to go off on a tangent there, and I'm back to remembering what 
   it was.  And that was, when we talk about the population side, when we 
   talk about what we're going to do there, we clearly have to get down to 
   a level that is competitive.  That doesn't necessarily mean that 25,000 
   or 30,000 people will be terminated.  It means that there are some 
   pieces of our business that I will try to separate from Digital and sell.  
   Or set up as some kind of stand-alone enterprise.  That's not to say 
   there won't be some people that will be terminated, because look at the 
   numbers.  
 
   So it'll be a combination of attrition -- continuing to weed out weaker 
   performers.  Elimination of redundant levels of management.  We've been 
   saying that for a long time.  We've taken out a few, not near enough.  
   It's amazing how resistant management layers are to change.  Not only 
   in our company, but other companies.  But now is the time.  I need 
   the support of our management team worldwide to address these issues.  

    Two eight cylinder cars driving down the road.  One car gets 24 MPG and
    the other gets 18 MPG.  The obvious solution to the mileage deficit is
    to remove 3 of the cylinders from the 18 MPG car.

    Re: the article
    
    I thought the most poignant statement wasn't in the text; but in the
    six-year stock chart graphic.
    
    

    	Someone told me they saw a recent quote about reducing the employee
    population to 65,000 within two years. However, BP did say that he
    wanted to be profitable by the end of this calendar year. So my guess
    is that we'll see reductions of 7-8k people per quarter for the next 3
    quarters at least. I also can't imagine us letting go of all the
    contractors as many are involved with critical projects and simply
    can't be let go.
    	I thought that was one of the funniest parts of his DVN broadcast,
    when he said that he'd rather we were a profitable $10B company that a
    $14B company losing money......not that he thinks we should be a $10B
    company!
    	Also, this talk about selling off parts of the business is
    interesting. You can typically only sell off the parts of the business
    doing well...not the parts you want to "unload." So I fail to see how
    we'll be in better shape when we're down to 65,000 people working on
    the areas that nobody else wanted. I see our revenue decreasing by more
    than the cost savings from reducing headcount by 30%. But, hey, call me
    a pessimist!

	DIGITAL CUTS
	NEW YORK (AP) -- Digital Equipment Corp. plans to eliminate
another 20,000 jobs over the next two years and may sell some
businesses in a bid to become more competitive, the company
confirmed Friday. The huge computer company currently employs about
92,000 people, and has previously said it intended to cut 7,000
jobs in this quarter. The Wall Street Journal reported Friday that
Digital Chief Executive Robert B. Palmer plans another 20,000 job
cuts over the next two years and has warned ``the whole enterprise
could be at risk'' if the moves aren't made.
	

The following is taken from VTX Storage, under Consultant Reports, and presents
a quite different view of Digital's situation than Business Week does.
------------------------------------------------------------------------------
 Storage Business Unit
 Consultant Reports

 Digital's Had It Now: Fact, Fiction ...

 Copyright (c) 1994 Illuminata
 
 Digital's Had It Now: Fact, Fiction or Feeding Frenzy?
 
      Digital's 3rd quarter results were, in the words of pop
      musician Warren Zevon, "not that pretty at all."
                         - Terry Shannon, 4/18/94
 
      Sometimes, in the news business, people create
      cliffhangers where there are no cliffs and write about
      events in a tone of urgency that has no basis in fact.
      ...  And that is why some journalists' credibility
      depends largely on the forgetfulness of ... people.
                         - Garrison Keillor, 4/17/94 Boston
                         Globe
 
 A feeding frenzy has developed around Digital's poor 3rd quarter
 financial results. It's not clear  there's much to sustain this
 frenzy other than the press's-and their readers'-love of the
 sensational. Though the results are disappointing, and while
 serious additional measures such as headcount reduction must be
 taken, these are not much of a surprise. Indeed, most of the
 relevant facts regarding Digital's financial and structural
 situation were either already well known or quite predictable.
 They've been seen time and again in similar restructurings. This
 is how turnarounds happen, alternately moving forward and moving
 back. They don't happen overnight, nor are they pretty. Given the
 computer industry's ongoing reorganization, you'd think people
 would understand that by now-but if you thought that, you'd
 certainly be wrong. Here is our take:
 
 Point     Digital is financially troubled.
 
 Counter   Yes, it is. Like any large corporation forced to
           restructure itself and its principal product lines, DEC
           has considerable problems on its hands. It is losing
           money, and its margins are falling. It needs a much
           lower cost of doing business, and it needs to forecast
           its business better.
 
           On the other hand, Digital's financial problems are not
           the end of the story. Though troubled in some areas,
           the firm is quite robust in others. For example, it has
           over $1.25B in the bank. Total product revenues in
           3FQ94 were up sequentially, and AXP revenues up
           enormously, despite the fact that 2FQ is traditionally
           stronger. Digital's StorageWorks and PC business units
           are rapidly growing and are now profitable. Digital's
           book-to-bill ratio was positive in all geographies
           worldwide. Etc. Etc. Etc.
 
           In other words, users and investors should continue to
           be concerned. But the "doom and gloom" response to
           Digital's unacceptable 3Q financial report does not
           reflect the firm's strengths or opportunities. The
           question from a competitive or customer viewpoint is
           not where Digital's stock is going, but rather whether
           it remains a strong and viable business. Though issues
           such as a too-high cost of making and selling products
           are real, they are resolvable. A new, second generation
           of AXP systems has just been introduced, and these
           should contribute to sales momentum, even outside DEC's
           historical base. So with good execution, DEC's
           financial problems do not keep it from being an strong
           systems vendor.
 
 Point     If DEC doesn't make a profit in 4FQ94, Palmer is gone.

 Counter   Unlikely. Though the current results are disappointing,
           only a real optimist would have expected significantly
           better results from a company recovering from the
           malaise in which the company found itself when Palmer
           took the helm. The company clearly cannot be turned
           around within FY1994. Nonetheless, much has been
           achieved. For example, the company has been organized
           for accountability and proper reporting. Major captive
           divisions such as PCs and StorageWorks are now
           profitable and making market headway. Palmer himself is
           settling in. As an articulate, poised, and highly
           credible CEO, he is just the kind of leader DEC needs
           in its bad patch. Given continuing corporate
           improvements, as well as the reinvigoration likely from
           second-generation AXP systems, the current management
           team probably has twelve to eighteen months more to
           prove itself though improved results.
 
 Point     Digital's gross profit margins have dropped.

 Counter   Yep. Declining gross margins are an inevitability as
           traditional IT vendors are forced to adopt a PC-like
           pricing structure. Though even Robert Palmer admits the
           company does not have a competitive cost structure, it
           is improving. DEC's new AXP server systems, for
           instance, incorporate commodity technologies and new
           packaging that enable low prices while maintaining
           acceptable margins.  Anticipated product announcements
           through the rest of 1994 will proliferate and
           accelerate these advances throughout the product line.

           So while Digital has significant work ahead on cost
           reduction, it is at least "work in progress."
 
 Point     Digital's cost structures are unsustainable.
 
 Counter   Yes. Even Robert Palmer says this. That's why Digital
           will not have to sustain those costs for much longer.
           While Digital already has aggressively cut payroll, R&D
           and other costs, these efforts have proven inadequate.
           Management appears willing to make strong corrections,
           including reducing headcount well beyond the 7K
           reduction already planned for the current quarter.
           Digital also recognizes the need to leverage indirect
           channels to reduce SG&A, but believes that significant
           sales disruption would accompany immediate and drastic
           restructuring of the direct sales force. More work on
           cost containment and a lower-cost business structure
           will be necessary-but this is likely to occur.

 Point     Digital cannot sustain the investment required to build
           AXP chips.
 
 Counter   Nonsense. Many other companies with less skill and
           fewer resources in semiconductor fabrication-among them
           HP, MIPS/SGI, and Sun-have maintained chip design and
           fabrication efforts (whether in-house or
           collaboratively) over the past few years. There is
           little reason to suspect Digital, with its extensive
           CMOS experience and more than a billion dollars on-
           hand, cannot build or buy whatever is required.
 
           While there was cause for skepticism back in early 1992
           when DEC introduced its AXP strategy, there should be
           few questions today. DEC has managed to regularly up
           the ante. Current EV4 chips are shipping up to 200 MHz,
           with 275 MHz ready by 4Q94. The second-generation EV5
           chips (with over 9M transistors and 4-way super-scalar
           support) will soon be produced in volume. And the new
           Fab6 facility for producing third-generation EV6 chips
           is reportedly ahead of schedule. We see no signs that
           Digital cannot support its design and fabrication
           requirements for at least two additional AXP
           generations.
 
 Point     Digital's service revenues are down.
 
 Counter   This is an inevitable effect of the VAX-to-AXP
           transition, and to be expected. AXP allows  numerous
           VAX systems to be replaced with fewer AXP systems. Not
           only are fewer systems required, each of these systems
           is inherently more reliable. Though this has a good
           side, in that DEC can now provide a three-year hardware
           warranty with all second-generation AXP servers, it
           also means that fewer hardware maintenance dollars will
           be flowing in. This traditional maintenance business
           remains very profitable-there's just a whole lot less
           of it. Fewer people will thus be necessary to provide
           this service.

           While traditional hardware maintenance revenues are
           declining, consultative services such as systems and
           network integration are growing. This will enable
           Digital to capitalize on new revenue opportunities,
           though in the near term these revenues will grow more
           slowly than traditional maintenance falls.
 
 Point     Digital is experiencing a precipitous decline in VAX
           system sales.

 Counter:  Yes, of course. This is to be expected as DEC customers
           migrate to AXP platforms. Users now buy VAX systems
           primarily to increase capacity for existing, stable
           applications.
 
 Point     Users are actually unplugging their VAX systems.
 
 Counter   Yes, of course. Given the price-and-performance of the
           AXP systems, just one or two can replace an entire
           cluster of VAXen. As maintaining the older, less
           reliable VAX systems is relatively expensive, it is
           cheaper to decommission them that it is to keep them
           running. An inevitable side-effect of ever cheaper,
           ever faster systems is that hardware becomes more
           disposable.
 
 Point     No one is buying AXP systems.
 
 Counter   Not true. AXP systems are selling briskly. AXP sales
           were up 66% in 3FQ94 from 2FQ94. This represents robust
           sales growth that was, indeed, far more than the firm
           expected.
 
           The problem for DEC is that these systems bring in
           lower revenues and lower margins than those for the
           VAX. Better cost controls and lower headcount will thus
           be required to maintain a viable business. But the
           notion that DEC's problems are caused by users not
           buying AXP systems is simply hokum.

 Point     Digital can't deliver AXP processors in volume.
 
 Counter   Actually, it can. Though DEC has had recent order
           backlogs, these stem from poor forecasting regarding
           other system components such as DRAMs, disk drives, and
           monitors. AXP microprocessors have not been a
           significant limiting factor. Not only is the current
           generation (EV4) of AXP chips sufficient to meet
           demand, Digital's second-generation (EV5) chipset soon
           will enter volume production at the firm's Hudson
           semiconductor facility.
 
 Point      Digital sells only to the installed base.
 
 Counter   Over the past few years, this has been very much the
           case. As it underwent major product line transitions,
           the company hasn't had much worth offering outside its
           base. Watch for a reversal over the next six to
           eighteen months. This change is enabled by the advent
           of mature versions of DEC OSF/1 and OpenVMS running on
           second-generation AXP products. The recently announced
           DEC 2100, for example, represents a breakthrough
           product with the opportunity to break out of the
           installed base and to gain share in new markets.
 
 Point     Digital has a poor corporate image and minimal
           mindshare.

 Counter   Yep. Digital recent marketing campaign has focused on
           "the vision thing" rather than on articulating a
           compelling story or even product differentiation. At
           the same time, do not take shoddy marketing as a total
           catastrophe. Better advertising would help. More
           important will be the emergence of the second-
           generation AXP systems. The sales force is
           enthusiastic, and will be able to transfer at least
           some of this enthusiasm to customers-even those outside
           the installed base. Also remember that many companies,
           including Apple, Microsoft, NCR, and Oracle have
           recovered nicely from broad industry impressions that
           their main product lines belong in the "can't shoot
           straight gang."
 
 Point     Morale at Digital is abysmal.
 
 Counter   It's never particularly pleasant when a company must
           downsize, as Digital must do. On the other hand,
           Digital is hardly alone here. Apple, IBM, and many
           other leading vendors have seen similar requirements in
           the past year. Anecdotal evidence indicates that morale
           is fairly strong in light of the recent launch of the
           key DEC 2100 product set.
 
 Point     Digital has a confused operating system strategy.
 
 Counter   Yes, it does. Unlike rivals such as HP and IBM, Digital
           is finding it difficult to articulate a multi-pronged
           OS strategy. Nonetheless, DEC now seems to realize that
           its near-term success must rest on its two primary
           operating systems, OpenVMS and DEC OSF/1. It has wisely
           focused most of its development and marketing resources
           on these alternatives. We believe that these will
           increasingly become the front-runners in the months to
           come.

    
    
    Future's so bright, we've got to wear shades.

    excuses

I'd like to see the actual article rather than a copy somebody else has already
typed in.

				Thanks,
				Trace - TAY 1-2/000