Conference 7.286::digital

    Q4 doesn't end until the 30th.  Results are normally announced
    3-4 weeks later.

Q4 ends july 2

    
    
    	Yes, but some fluctuation in the share price (not seen yet)
    normally indicates that rumours of the results have begun to leak.
    
    Also, this is a good time for insider dealing, and as a share-holder
    I am keen to make a better gain than the current $19.5/share !
    
    I guess it is a bit optimistic to hope that the 'bug' in the accounting
    package that generated the Cost of Buisness last quarter has been 
    detected, and that really the decimal place had been six digits out !
    
    Ian 

    re .3: ... decimal six places out
    
    In wihch direction?

    	InformationWeek, in the recent article on BP and Digital, predicted
    a Q4 loss in the neighborhood of $170M *before* any restructuring
    charges...with rumors of a $1-1.5B restructuring charge on top of it.
    The article said this was based on financial data they had seen so far
    and that the company was "behaving" like it was expecting a fairly
    significant Q4 loss.

    I've simply heard that the Q4 loss is going to surpass that of Q3.  Can
    always hope my usually reliable and accurate sources are wrong, for a
    change.

    
    	My roundup of the usual suspects in my intelligence network all
    seem to be in agreement for this quarter (4QFY94).
    	Digital will report a small operating profit (>$60MM), but a
    humongous loss due to write-offs and "packages" to the tune of $8-$9
    a share (roughly $1.1Billion to $1.3Billion). This action will drive
    book value to $25/share, but the sources believe that the impact on
    current share price of around $20 will be minimal.
    	These sources, which last quarter hit the nail on the head, also
    noted that if the stock falls below $16/share buyers will emerge from
    all over. Their reasoning is that our semiconductor FABS, PC unit, and
    Storage Group are worth $2.2-billion today, and any premium being paid
    for the company after that is buying the VAX installed base cash cow
    and MCS/DC units. These sources also note that even in a bidding war
    for Digital, the share price to the winner is probably not exceed
    $42/share.
    	Some kind of food for thought, don't you think?
    
    			the Greyhawk

    The drop in revenue will be interesting...
    Compaq just might overtake Digital by the end of the year.

    re: .7
    
    How did your sources hit the nail on the head last quarter when the SLT
    didn't seem to have a clue?... or did I just answer my own question?
    
    					JT

    re .8
    
    Revenue might show an increase and not a decrease. According the
    Product Lead time guide (June 27th, 1994 message):
    
    "The demand for our products in Q4 has been tremendous.  Let's keep
    the momentum going in Q1."
    
    And Service revenue declines might be offset by the dollar's ~10%
    decline against most other G-7 currencies (from year ago levels).
    
    

    
    Based on my order backlog, mfg is shipping everything but the kitchen
    sink. 
    
    It's pretty amazing when compared to previous results and past due
    orders.
    
    Dave
    

    
    	My sources are both internal and external. My Mfg. guys in Q3 said
    we could ship anything on-time, the European guys said business was in
    the tank, and my external folks were all looking at losses. Your right
    the SLT doesn't have a clue, but how can you if you sit in meetings all
    day in MA listening to people who don't have a clue either. One of
    these days people above a Level 4 are going to ask us grunts which way
    the bullets are coming, instead of guessing by the sound of the
    gunfire.
    
    		the Greyhawk

    word is that the US is having one of its best quarters in recent
    memory, Asia is doing fine, jury is out on Europe...depending on how
    bad Europe is probably means a difference between Q4 being black or red

    
      WSJ said that the PCBU will post a profit and had a 125% increase
    in growth in Europe according to VP Auer and that Digital will be
    one of the top 5 PC makers in 1995.  That's one oar, now to fix the
    others.
    
           Mark

    and we'll probably sell the PC business because of it. (sigh)

           re: .5 by STAR::DIPIRRO >>>
           
>                       -< Anybody's guess at this point >-

>    	InformationWeek, in the recent article on BP and Digital, predicted
>    a Q4 loss in the neighborhood of $170M *before* any restructuring
>    charges...with rumors of a $1-1.5B restructuring charge on top of it.

           Just curious about how much the avg TFSO per person would be
           for a $1-1.5B restructuring charge, and how many?  It seems
           high (assuming restructuring is mainly TFSO's), after hearing
           some of next 20K people will come from divesting or selling
           off.  
           
           So, best case, if DEC "only" TFSO'd 10K in FY95, the $1.0B
           would translate to $100K per TFSO... seems high.  Worst case,
           a 20K headcount reduction would be $50K/, right?  Still high?
           Anybody done any other figuring?
           
           Steve
           

    Yes, plant/faciliy closings.  Also, laws concerning TFSO's in Europe
    attach a very high (compared to most states in the U.S.) price tag. 
    Also, there may be extra costs assoicated with contracts that are being
    terminated.
    
    rww

    >WSJ said that the PCBU will post a profit and had a 125% increase
    >in growth in Europe according to VP Auer and that Digital will be
    >one of the top 5 PC makers in 1995.
    
    Mark,
    
    
    What is the date of this WSJ article ?
    
    Thanks,
    Phil

    
Printed without permission - Information week  4/July article.


This is from the July 4th issue of Information week:

DEC's last Chance

Time may be running out for Digital Equipment Corp.  The past year has 
arguably been the worst ever for the computer maker's customers, employees,
and shareholders, all of whom are demanding to know how the company will stop
its precipitous decline.  The situation has a chorus of analysts warning 
"It's now or never."

Digital's 1994 fiscal year is to end July 2, and Wall street predicts a 
loss for the fourth quarter of between $130 million and $172 million.  Laura
Conigliaro of Prudential Securities Inc. in New York estimates the company
will lose more than $500 million for the year.  Digital's stock - trading in
the mid-$70s just three years ago - has skidded to about $19 a share.
Still, it won't be the worst loss in company history, even with an added $1 
billion charge for restructuring.  Digital lost $2.8 billion in fiscal 1992.

Yet there's a consensus that Dgitial has sunk as low as it can go, that it must
show upward momentum very soon.  Otherwise, the company "risks becoming another
Data General, or worse, another Prime or Wang," says Terry Shannon, an
analyst at Illuminata, a Hollis, N.H., consultancy.

Digital has a recovery plan, though company officals won't discuss it.  
Analysts and Digital insiders say the strategy involves laying off up to
20,000 workers; reorganizing sales staff into independent agents; selling 
off business lines and products such as its Rdb database and All-IN-1 office
automation suite; and restructuring around nine units just over a year
ago.

These moves may help Maynard, Mass-based Digital get its financials in order
and stanch the flow of red ink.  But a larger question remains:  What can
Digital offer that customers can't get elsewhere?

Last year, the company seemed to have found the answer.  Losses declined in 
fiscal 1993 and Digital posted a profit in the fourth quarter.  But what 
little improvement the company achieved evaporated as maintenance revenue on 
its aging VAX computer line declined and operating expenses remained high 
compared with those of its competitors.  Even its successes have been 
a double-edged sword:  After finally developing a successful PC strategy,
cut-throad competition turned margins razor-thin.

So now it's time for a new strategy.  Ceo Robert Palmer presented a plan to 
Digital's board of directors on June 16.  That same day, he circulated a 
memo assuring employees that "a brand-new Digital" would be rolled out soon.

Customers have heard this before.  In his 19th months as CEO, Palmer has 
presided over several major and minor overhauls of product and sales
strategies and cost-cutting measures.  But little seems to have worked.
He's definitely got another plan up his sleeve," says Judith Hurwitz, a
consultant in Watertown, Mass.,  "but he isn't saying much about it".
Digital needs to communicate its strategy soon, says Hurwitz, because the 
company is "in a state of chaos verging on paralysis, and no one is going
to buy froma a company that's paralyzed.

The identity that Digital appears to be shaping is that of a technology 
leader focused on client-server and networked computing.  The company
also is focusing ona amicrochip of its own design and manufacture, the 
Alpha AXP.  The chip is generally credited with excellent price/performance,
and sales of Alpha machines appear to be a bright spot:  Even in the third 
quarter, when Digital lost $183 million, Alpha sales were up by 5%.

Too Devoted to Alpha?

But some customers fear the company is too devoted to Alpha.  "Digital's
betting the ranch on that chip," says Harvey Shrednick, senior VP of 
information systems (IS) at glassware manufacturing Corning Inc., in
Corning, N. Y. "That's a mistake."  The danger, adds Shrednick, is that an 
obsession with Alpha will siphon off resources that could be devoted to 
other technologies, such as client-server applications.  Peter Daboul,
senior VP of IS at Massachusetts Mutual Life Insurance Co. in Springfield,
Mass., also questions the emphasis on the new 64-bit chip.  "Alpha is just a 
chip to us," he says.  "It may be fast, but on the server side, where
hardware is cheap, speed isn't important.  Applications and functionality
are what interest us."

Digital has also pledged to accelerate its move to open software environments.
But again, communication has been a problem.  "The OpenVMS operating system
is absolutely key to Digital's future,"  says Illuminata's Shannon.  "But
Digital hasn't explained to customers what differentiates OpenVMS from its
OSF/1 and Windows NT products."  The inability to position these products,
Shannon says, is losing Digital customers.  "Users mistakenly think that 
moving from VMS to OpenVMS entails a big migration, 'I'll switch to a vendor
I feel comfortable with.'"
  
Such confusion among customers is one rason why Digital must act soon.  
Executive self-interest is another.  Palmer has predicted a return to 
profitability by year's end, and his job may hinge on making good on 
that statement.  "I don't think the board would dump Palmer immediately
because it would dd to the chaos," says Conigliaro of Prudential.  "But
he's got to show results by year's end."  William Milton, an analyst
at Brown Bros. Harriman & Co. in New York, agrees:  "He's got to show
improvement in the next two quarters."

Digital has been working hard to reassure major customers such as Corning's
Shrednick, who met with several top Digital executives, including Palmer,
following the company's disastrous third quarter.  They wanted "to assure me
that my company will not suffer as Digital turns itself around."  he says.
Still, Shrednick and others are growing impatient for details.  "We're
particularly interested in the fate of Rdb database,"  he says.  "We use
it in several areas of the company.

A little More Time:

Some customers, however, are willing to give Digital more time.  "We're not
too concerned about Digital's current problems, as long as the ware continues 
to be supported," says Terri Cheng, datacom manager at Mellon Bank in 
Pittsburgh.  Adds Ed Dobrowolski, systems project manager at Philadelphia
Electric Co.  "We've dealt with other vendors that have hit rough spots,
like Unisys, and they've come back.  We'd prefer that Digital didn't have
these problems, but we're not worried.

Other customers seem baffled by Digital's direction.  Daboul of Mass. Mutual 
says  that "Digital appears to be refocusing on networking.  That used to be a 
strength, but the company moved away from it."  Now, he says the timing of
renewed effort may mean that Digital is "up against the wall.  Competitors
have jumped into networking with both feet."

Palmer promised employees in his June 16 message that "we will carry a 
clear andn compelling message to the marketplace,"  one based on 
"innovation and technology."  Unfortunately, he didn't say when that would
happen.  "As we begin to implement changes over the coming months,"
he concluded, "I will share the details with you.  In the meantime, you should
make every effort to communicate clearly with employees, customers and
partners."

Palmer gave no advice on how his employees can communicate what they 
don't yet know.  Then again, no one expects an internal memo to solve
all Digital's problems.

    

    RE: ..."digital will be one of the top 5 PC vendors by 1995..." The
    PCBU will have to grow pretty fast since I saw a chart the other day
    in some publication which listed the top 10 PC vendors today....Digital
    was listed.
    
    Debbie
    

    regarding Information week article:
                                                                       
    >Even in the third quarter, when Digital lost $183 million, 
    >Alpha sales were up by 5%.
    
    This should have been 50% (or even 66%) and not 5%. 
    Another error that even worsens our picture when we might have showed a
    bright spot among all the negative rest.
    
    Another example is Datamation (June 15, 1994) which list our CY1993 
    PC sales at ~$600M with ~35% sales increase over CY92. All other figures 
    that i have seen estimate that we shipped 495,000 PC's with about
    $950M in revenue vs. 250,000 PC's in CY92.
    
      
    
    

    Can we bet ?????
    
    	Anywhere $100M to $ 200M RED !!!!!!!!!!!!!!!!!!!!
    
    

    Hmmm.  I'll toss out some guesses.  My guess is that the losses from last
    quarter took folks by surprise and that changes were made to assure that 
    they won't get taken by surprise again.   Changes to actually fix
    what went wrong might also have been done.  But, the changes won't show 
    up until Q1.  So, I expect that Q4 will look a lot like Q3.  
    
    More, I expect the 20K to not really affect the numbers that much as I 
    expect the majority of that to come from sell offs.  I have no personal 
    knowledge of any of this and am shooting from the hip like any other noter.  
    However, a wild guess (consistent with what I've observed) is that Digital 
    is going to stick to hardware and sell off its software and other non-
    hardware focused services, as a rule.  I mean, as far as the industry is 
    concerned, hardware seems to be where we shine.  And, with hardware ramping 
    up nicely, with break-even on selling off other sections of the company, I
    could imaging Digital actually being profitable in Q1 with
    profitability continuing in sequential quarters.  
    
    Stock?  I don't expect the stock value to change much at all.  Maybe dumb 
    reasoning, but I figure a *lot* of folks have, on paper, lost money on 
    Digital stock but have kept hold of it.  When they hear that Digital is 
    making money, they'll watch for the stock to nudge up a bit, then sell
    because they don't feel the profits are sustainable.  I mean, last year
    we had a quarter with a profit, but it turned out to be a blip.  So, 
    I expect supply and demand to keep the price down until Digital has
    truly established itself as a money maker.  Then, the stock price will
    begin slow but steady growth.  I expect that growth to level off during
    the next recession.  
    
    How's that for crystal balling?
    
    Steve

    I have to agree with the previous note .23, I too believe that q4 will
    be as bad, if not worse than Q3.  However, I believe that BP will be
    selling off our storage technology and some other parts of the company,
    it is very difficult to predict which parts but my guess is in this
    order....

    1. RDB, Allin1 and the like
    2. Chip manufacturing ( Not the Alpha technology )
    3. MCS ( Multi-Vendor Customer Services). Easy to sell and making money

    I also agree that I see us concentrating on our strong suits such as
    OpenVMS, Ultrix, and Hardware sales such as the Sable and associated
    Alpha technology.

    Again, this is pure speculation, nothing more but my partner is a
    market advisor for several large financial institutions in the "City"
    and has been accurate with her judgements in the past. A couple of
    predictions....

    Digital shares are likely to bottom out around $17.00

    If the shares dip below $16 **** BUY OUT TIME **** 

    Digital will show a profit Q1 or Q2

    The profit will not be sustainable for more than 3 quarters.

    Digital will return to profitability in the long term, after the
    reduction in head count, a smaller product line is introduced and the
    inevitable change in marketing that the company requires.

    So I guess you can say that the last hurdle is the worst but the
    most rewarding.

    I will re state that this is just opinion based on a little research
    and a few market trends and histories, don't put your shirt on anything,
    at least not until you can be 100% certain it's true. My partner made a
    point of saying that the companies she advises are after high risk-
    high gain ventures....


    Regards 


    Paul

    	Just a thought, but at one time Rdb runtime system was bundled with
    VMS, and not only are some customers still using it, but DEC was
    seriously considering using it in VMS. It seems that the VMS
    authorisation database starts getting rather inefficient and messy to
    manage with a very large number of users, and splitting it up between
    several RMS files (which is what is done now) is a pretty antique way 
    of handling a database. If we sell off Rdb could this mean that VMS
    could end up requiring Oracle as a pre-requisite?
    
    	I mentioned VMS because there it was seriously considered to put
    the authorisation database onto Rdb. At the time neither NT nor OSF/1
    existed. However, if we ever sell a disk server (or whatever) with tens
    or hundreds of thousands of user accounts (like a university campus) 
    we might be glad of a relational database runtime system that we could 
    bundle with the operating system without going begging.

    There was approx. 7 million dollars certed in just MCS business the
    last two weeks of the quater. This was just at KYO and doesn`t include
    any hardware that went to DDD.
    
    I think there will be a small profit for the quarter.

    I predict a small loss for Dec UK.
    
    Tony
    
    

    CERTS were 6.8% below budget, but just above the adjusted forecast
    given half a year ago. We just maybe in the black in my country.
    
    Henny, The Netherlands

 > However, a wild guess (consistent with what I've observed) is that Digital 
 > is going to stick to hardware and sell off its software and other non-
 > hardware focused services, as a rule.  I mean, as far as the industry is 
 > concerned, hardware seems to be where we shine.  And, with hardware ramping 
 > up nicely, with break-even on selling off other sections of the company,

 > How's that for crystal balling?
 
    WSJ reported that Digital has sold its storage division (a hardware
    business) to Everex.  The writer likened it to selling one of the
    crown jewels.  
    
    Since this was a profitable business, that means the remaining profit
    producing elements of the company will have to carry an increased 
    load of overhead.  How long until the strain breaks the whole company?
    
    [dale]
    
    
    

    Hardware is NOT where we shine. Maybe technologically, but not
    commercially. We should have made Alpha technology the de-facto new 64
    bit chip when we had the chance.
    
    All we did was arrogantly refusing to look at volume markets like the
    games industry, consumer electronics and car industry. I just heared
    that Ford has selected the Power-chip to be in all new Ford cars. Now
    that's a way to get volume, your plants busy and costs covered, while
    meanwhile also producing for your own internal use.
    
    We are soooo arrogant
    Henny

    We never had a chance to sell Alpha as a controller chip into a car.
    Neither did IBM with PowerPC. The reason that PowerPC will be in those
    future Ford's is Motorola's experience in this market. Motorola is an
    established player here with all the tools and experience that's
    needed.
    
    A microprocessor in a car is typically not used in it's standard
    version as in a computer. It is tightly integrated with power
    electronics, sensors etc. on the same chip. For each model there is a
    different chip design, which makes the tools to create those customized
    designs an essential asset. 
    
    Motorola has been in this business for years, we have not. Our entry in
    this market could be by licensing the Alpha architecture to one of the
    other players, like Texas Instruments, Siemens or SGS Thompson.
    
    But controllers in a car don't necessarily need 64 bit technology. In
    fact, a lot of applications still use 8 or 16 bit controllers.
    
    Klaus

    
    Maybe it's not our playground, but it is Motorola's, and hence
    PowerPC's.
    
    Now, I understand a few years back Digital had a good chance to go into
    the 64-bit chip business WITH MOTOROLA, but refused to pursue the
    opportunity.
    
    ...Think about it...maybe Alphas become the new Apple CPU...maybe
    PowerPC never comes about...IBM's in big trouble.
    
    But this didn't happen.  Why?  I'm with our Dutch colleague.
    
    Julian.
    

    >But this didn't happen.  Why?
    
    	hindsight is much easier than foresight, eh?

>    Now, I understand a few years back Digital had a good chance to go into
>    the 64-bit chip business WITH MOTOROLA, but refused to pursue the
>    opportunity.
    
    Not sure how true this is, we did manufacture some Motorola gate array
    stuff in hudson, but I don't know of any join CPU talks.  
    
>    ...Think about it...maybe Alphas become the new Apple CPU...maybe
>    PowerPC never comes about...IBM's in big trouble.
    
    Yeah, imagine if Scully had just asked KO in 1990 if DEC would be
    interested in letting Apple use Alpha.  AND KO SAID YES....
    
    -Bruce
      
    

I believe there was a serious effort from Digital to get Apple to use Alpha.
It didn't happen.  But certainly the "scenario" given in .34 is not
credible.

	paul

    re: .35
    
    Didn't Apple approach Digital some years back and KO snubbed them?
    
    dave

    Very true.  Apple approached Digital on Alpha several years ago.  Many
    engineers and executives meet with Apple execs and engineers.  Apple
    decides it wants Alpha as its next generation chip.  KO decides he did
    not want Apple to have Alpha.  About two months later the
    IBM/Motorola/Apple Power PC group is started.
    
    

    
    Ia m  mazed by the silence, as we wait for the other shoe to fall, 
    there are no rumours, CNN reputed reports, or any other stories.
    Not that I want any more rumours, it is time for the real word!
    
    It reminds me of the end of the motion picture, "The Day the Earth
    Caught Fire", the scene in the newspaper office, where the news 
    staff had produced two front pages, "World Doomed" and World 
    Saved" The film ended with the newsroom waiting to hear the r
    results of the desperate attempts to divert the Earth from its 
    spiral into the sun, 
    
    regards
    
    Patrick
    

    There appears to be a change in approach by the SLT. Previous
    're-organisations and strategies' were announced with great fanfair and
    ballyhoo. This time, however, nothing has really been said, apart from 
    we'll let you know when we decide to let you know; and letting us know
    appears to be when a deal has been done. Thus, no rumours, no
    speculation, no chance for rearguard actions and protecting of empires.
    
    Angus

>    There appears to be a change in approach by the SLT. Previous
>    're-organisations and strategies' were announced with great fanfair and
>    ballyhoo. This time, however, nothing has really been said, apart from 
>    we'll let you know when we decide to let you know; and letting us know
>    appears to be when a deal has been done. Thus, no rumours, no
>    speculation, no chance for rearguard actions and protecting of empires.
 
      Maybe this is a good thing. Since all the other much hyped
    're-organisations and strategies' haven't worked, perhaps this one will
    have less fanfair and more positive effect.
    
    Ken

    Re: .39 
    
    > ... we'll let you know when we decide to let you know
    
    Shouldn't that be:
    
    we'll let you know when we decide to let you go
    
    ? :-)

    and when will the results be "due"? can it be held back indefinitely?
    
    I just don't think that "that" can be done, but... who knows! anything
    is possible these days...
    
    Ana
    

>                      <<< Note 3218.42 by MROA::MAHONEY >>>
>                           -< Is there a deadline? >-
>
>    and when will the results be "due"? can it be held back indefinitely?
>    



 Digital - Analysts expect more bad financial news
	{The Nashua Telegraph, 9-Jul-94, p. 7}
   Fourth-quarter earnings are due July 25 and estimates by independent
 industry analysts is the company may report a loss of about $102 million for
 the three-month period ended June 30.

Dec stock up to $21 ... Any rumors???

    Digital has been getting press about selling off its hardware.  The
    idea is that Digital will go for some quick bucks through some
    strategic selling.  Read this in the July 11 EE Times.  Pretty safe bet
    that Wall Street figures we'll make some quick bucks through
    liquidation.
    
    Steve

    Couldn't find anything in VTX that might have triggered the stock price
    rise, but did find this on America Online:
    
    DIGITAL EQUIPMENT CORPORATION AND GENERAL INSTRUMENT CORPORATION FORM
    ALLIANCETO DELIVER END-TO-END INTERACTIVE VIDEO CAPABILITY  Digital's
    video server architecture and GI's DigiCipher II digital compression
    technology to accelerate market penetration of interactive 
    video services 
     
        MAYNARD, Mass., July 11 /PRNewswire/ -- Digital Equipment
    Corporation (NYSE: DEC) and General Instrument Corporation (NYSE: GIC)
    today announced they are presenting end-to-end interactive video system
    solutions to network providers of interactive information services. 
    The systems include Digital's open Video and Interactive Information
    Architecture (VIIA) and GI's DigiCipher II MPEG-compliant satellite
    encryption system and DigiCable addressable set-top terminals with LinX
    computer-powered interactive modules. 
    
    "A number of different hardware and software providers in the
    interactive video arena have recognized the individual strengths that
    General Instrument and Digital offer," said Charles F. Christ, vice
    president of Digital's Storage Business Unit.  "Combining Digital's
    microprocessor, video server and storage technologies with GI's set-top
    terminal products and technologies makes possible a wide range of
    interactive video programming capable of being viewed by large numbers
    of users simultaneously." 
    
    "This agreement signifies another endorsement of GI's established
    digital compression technology," said Hal Krisbergh, president of the
    GI Communications Division of General Instrument.  "DigiCipher, and its
    cable component DigiCable, offer a means of providing up to 10 channels
    of programming in the same space used today by a single channel.  By
    combining Digital's product and technology strengths with General
    Instrument's large installed base, the two companies provide more
    options for consumers seeking access to a range of new entertainment
    and learning products." 
    
    General Instrument developed its LinX module to serve as an open
    platform for a number of applications providers.  The LinX module gives
    GI's addressable terminals the power of a computer, allowing for any
    number of future interactive applications. 
    
    Digital's VIIA solution provides a robust hardware and layered software
    platform based on open standards for easy integration with existing
    technologies, as well as streamlined low-cost development of new
    hardware and software capabilities.  The VIIA approach comprises a
    range of Digital's processing, data storage and management products,
    including Alpha AXP processors, StorageWorks disk storage arrays and
    Digital Linear Tape library systems. 
    
    The server platform also incorporates an interactive gateway unit, a
    server management unit, a networking switch linking the various
    elements and software, written in object-oriented UNIX, to manage the
    elements of the server platform and the interface with the set-top
    terminal. 
    
    General Instrument Corporation, headquartered in Chicago, is a world
    leader in broadband transmission, distribution and access control
    technologies for cable, satellite, telephony and terrestrial
    broadcasting applications, high definition television technology, and
    discrete power rectifying components. 
    
    Digital Equipment Corporation is the world's leader in open
    client/server solutions from personal computing to integrated worldwide
    information systems. Digital's scalable Alpha AXP platforms, storage,
    networking, software and services, together with industry-focused
    solutions from business partners, help organizations compete and win in
    today's global marketplace. 
    
    NOTE:  Alpha AXP, Digital, the Digital logo, GIGAswitch and
    StorageWorks are trademarks of Digital Equipment Corporation.  UNIX is
    a registered trademark in the United States and other countries,
    licensed exclusively through X/Open Company, Ltd. 
    
    -0-                    7/11/94 /CONTACT:  Gloria Bates of Digital
    Equipment Corporation, 508-841-5365; or Karen Kane of General
    Instrument Corporation, 312-541-5011/ 
    
    (DEC GIC) 
     CO:  Digital Equipment Corporation; General Instrument Corporation ST:
    Massachusetts, Illinois IN:  CPR SU: 
    
    
    
    Transmitted:  94-07-11 09:20:46 EDT

    Mr. Palmer is meeting with the press Thursday July 14, 1994.

    RE: .44
    
        Digital has sold or in the process of selling an ALPHA AXP 3000
    Platform to Short Brothers, a division of Bombardier.  This information
    was released just about the same time as the stock rise, so maybe the
    investor world is saying "hey, somebody is really buying that 64-bit
    equipment".
    
           Mark

    Boy, we get this knd of rise in the share pice by selling one system?
    Imagine (tm) what we could do if we sold 3 or 4! :-)

    re .48
    
    Gee, the sale of "an ALPHA AXP 3000 Platform" results in our market
    capitalization going up by ~ $200 Million ! 
    
     

    
    	As a stated in a previous notes file - our stock is climbing due to
    a "special accumulate" placed on DEC stock by Paine Webber to its very
    best institutional clients on Monday PM. The report says that Digital
    should hit $30/share within "the near term" , which means a six-month
    window. At the time of the report we were selling at a 55% DISCOUNT to
    book value which PW called "solid".
    
    	the Greyhawk

Re .44... Have you tried selling to the Tall Brothers as well...

    
    
    
    I understand that today is D-DAY. 
    
    	
    Has anyone had a sniff of the results yet ?

    Tomorrow is D-day.  Today is the day Palmer has to decide if the
    blue Gucci tie goes with the gold Rolex.

    
    Any news my Yankee friends??
    
    Tony
    
    

              Digital reports Q4, year-end operating results

   
         Digital today reported results for its fourth quarter and year end, 
   which ended July 2, 1994.
   
         For the quarter, the corporation reported a net loss $1,746,360,000 
   or $12.64 per common share.  Excluding restructuring charges of $1.2 
   billion and non-cash reductions in the carrying value of intangible and 
   deferred tax assets totaling $380 million, the net loss for the quarter 
   was $160,360,000, or $1.22 per common share, compared with net earnings 
   of $113,196,000, or 85 cents per common share in the comparable quarter a 
   year ago.  Total operating revenues for the quarter were $3,922,974,000, 
   compared with $3,913,951,000 for the fourth quarter of fiscal year 1993. 

         For the fiscal year ended July 2, 1994, the reported net loss was 
   $2,156,063,000 or $15.80 per common share.  Excluding restructuring 
   charges and asset write-offs, as mentioned above, and the effect of 
   accounting changes totaling $51,026,000, the net loss for the fiscal year 
   was $519,037,000, or $3.86 per common share, compared with a net loss of 
   $251,330,000, or $1.93 per common share for fiscal year 1993.  Total 
   operating revenues for the fiscal year 1994 were $13,450,790,000, down 6% 
   from fiscal year 1993.  
   
         Robert B. Palmer, president and chief executive officer, said, "The 
   fundamentals of our business are showing some positive and encouraging 
   signs.  We experienced order rate growth year-over-year for the second 
   quarter in a row -- the first time in almost five years.  Alpha AXP 
   systems revenues grew 54 percent sequentially, and 164 percent 
   year-over-year.  Alpha AXP systems now represent 31 percent of our 
   systems revenue, and surpassed VAX revenues in the quarter.  We have now 
   shipped more than $1 billion worth of Alpha AXP systems. Our PC business 
   nearly doubled in the quarter, and now represents 39 percent of Digital's 
   systems revenue.  
   
         "Our Asia Pacific region continues to show strong growth, 
   particularly in Japan and Australia/New Zealand," Palmer continued.  "We 
   saw improvement in the Americas, led by slight growth in Canada and Latin 
   America.  This is the second quarter in a row of improvements for the 
   Americas.   Europe is showing signs of stabilizing.  Two weeks ago, we 
   announced steps in Digital's continuing turnaround process that will 
   streamline and simplify our organization.  Our customers will see us as 
   increasingly flexible and efficient, and we will achieve a cost structure 
   that reflects the realities of today's marketplace."  
   
         For the quarter, gross margins on products declined to 25 percent 
   of product revenues. The decline in product gross margins was due to 
   pricing, a continued shift in mix to low end products, indirect channels 
   and one-time costs associated with plant closures.  For the full fiscal 
   year 1994, approximately 45 percent of product revenues moved through 
   indirect channels, up from 33 percent in fiscal year 1993.

         Given the continued pressure on product gross margins and service 
   revenues and margins, Digital remains cautious in its outlook for fiscal 
   year 1995.
   
         The company took a restructuring charge of $1.2 billion in the 
   quarter to be used for workforce reductions of approximately 20,000 and 
   the elimination of approximately 10 million square feet of space.  The 
   restructuring actions are expected to result in annualized cost 
   eliminations of approximately $1.85 billion. These actions do not include 
   workforce or facility reductions that may result from divestments in 
   which Digital may engage.  In the quarter, the company reduced its 
   headcount by 9,200.  

         Vincent Mullarkey, vice president and chief financial officer, 
   said, "We ended the year with $1.18 billion in cash and generated cash 
   from operations in the quarter.  This performance coupled with the 
   announced sale of a portion of our Storage business, further increases 
   our confidence in our plans to fund restructuring activities from 
   operations and asset management efforts. 
   
         Palmer continued, "Our customers value Digital's ability to provide 
   what they are looking for in today's increasingly complex multivendor 
   environment:  our ability to implement and support, directly and through 
   partners, networked platforms and applications for heterogeneous 
   client/server environments.

         "We have also made substantial progress in our key product areas. 
   In the spring, we launched the highly successful Digital 2100 Server.  
   Just last week, we announced leading price/performance workstations. 
   
         "This is a Darwinian industry where only the most adaptable 
   survive.  We are taking the best and most successful business strategies 
   -- honed in the competitive PC, storage and components segments of our 
   business -- and applying them on a larger scale across the company.  
   Within the year, the result will be a leaner and more agile company 
   sharply focused on meeting the needs of customers, the demands of the 
   marketplace, and the challenges of competitors."  

                                                 THREE MONTHS ENDED
                                                JULY 2, 1994      JULY 3, 1993 
 Net Product Sales                            $2,224,702,000    $2,085,567,000 
 Service & Other Revenues                      1,698,272,000    1,828,384,000    
 Total Operating Revenues                      3,922,974,000    3,913,951,000    
 Cost of Product Sales                         1,663,840,000     1,277,981,000 
 Service & Other Expense                       1,084,462,000     1,060,298,000 
 Total Cost of Sales                           2,748,302,000     2,338,279,000   
 Research & Engineering                          338,915,000       369,376,000  
 Selling, General & Admin.                     1,292,071,000     1,088,067,000 
 Restructuring Charge                          1,206,000,000           ---
 Net Interest (Income)/Expense                    10,335,000        (1,990,000) 


 Income/(Loss) Before Income Taxes            (1,672,649,000)      120,219,000 
 Provision for Income Taxes                       73,711,000         7,023,000 
 Net Income/(Loss)                            (1,746,360,000)      113,196,000   
 Dividends on Preferred Shares                     8,875,000           ---   
 Net Income/(Loss) Applicable to Common Stock (1,755,235,000)      113,196,000 
 Weighted Avg. Shares O/S                        138,905,007       133,476,529 
 Net Loss per Common Share                            (12.64)              .85
 
                                                    TWELVE MONTHS ENDED
                                                 JULY 2, 1994      JULY 3, 1993
 Product Sales                                $ 7,191,251,000   $ 7,587,994,000
 Service & Other Revenues                       6,259,539,000     6,783,375,000


 Total Operating Revenues                      13,450,790,000    14,371,369,000  
 Cost of Product Sales                          4,968,025,000     4,464,445,000 
 Service & Other Expenses                       3,943,612,000     4,166,946,000
 Total Cost of Sales                            8,911,637,000     8,631,391,000 
 Research & Engineering                         1,301,347,000     1,530,119,000 
 Selling, General & Admin.                      4,027,869,000     4,447,160,000 
 Restructuring Charge                           1,206,000,000           ---
 Net Interest (Income)/Expense                     23,931,000       (12,994,000) 
 Loss Before Income Taxes & Cumulative Effect
  of Change in Accounting Principle             2,019,994,000       224,307,000        




 Provision for Income Taxes                        85,043,000        27,023,000 
 Loss Before Cumulative Effect of Change 
  in Accounting Principle                       2,105,037,000       251,330,000   
 Cumulative Effect of Change in          
  Accounting Principle (1)                         51,026,000           ---                
 Net Loss                                       2,156,063,000       251,330,000      
 Dividends on Preferred Shares                     10,650,000           ---           
 Net Loss Applicable to Common Stock            2,166,713,000       251,330,000                
 Weighted Avg Shares O/S                          137,090,367       130,408,884          
 Net Loss per Common Share Before Cumulative                                     
  Effect of Change in Accounting Principle      $       15.43      $       1.93       
 Loss per Share on Cumulative Effect of Change


  Effect of Change in Accounting Principle                .37               --- 
 Net Loss per Common Share                      $       15.80      $       1.93
 
 (1) Includes a one-time charge of $71,068,000 for postemployment benefits, 
 applied retroactively to the first quarter of the fiscal year, and a one-time 
 benefit of $20,042,000 for income taxes recorded in the first quarter.   
 
           SELECTED BALANCE SHEET/CASH FLOW DATA - Q4FY94
 
 BALANCE SHEET:
 Cash & Cash Equivalents........................  $        1,180,863,000
 Accounts Receivable, Net.......................           3,318,854,000      


 A/R Days Sales Outstanding                                           76 
 Inventories:  Raw Materials.............$476,172,000     
               Work in Process........... 605,503,000 
               Finished Goods............ 982,303,000 
                  TOTAL.........................           2,063,978,000       
 Prepaid Expenses and Deferred Income Taxes.....             324,676,000                               
 Total Current Assets...........................           6,888,371,000       
 Net Property, Plant & Equipment................           3,129,489,000 
 Other Assets, Net..............................             561,911,000                
 Total Assets...................................  $       10,579,771,000            




 Bank Loans and Current Portion of LTD..........              32,614,000                      
 Accrued Restructuring Costs....................           1,351,075,000                    
 Total Current Liabilities......................           5,056,265,000         
 Noncurrent Deferred Tax Liability..............               4,758,000                 
 Long-term Debt.................................           1,010,680,000                  
 Postretirement & Postemployment Benefits.......           1,228,269,000        
 Total Liabilities..............................           7,299,972,000     
 Stockholders' Equity...........................           3,279,799,000        
 Book Value per Common Share....................                  $20.33                 




 CASH FLOW:                                    QTR               YTD    
 Cash Flows from Operating Activities,  $    9,914,000    $ (356,140,000)      
 Including Deprec. & Amort. of.........    157,613,000       680,554,000
                      
 Cash Flows from Investing Activities,    (149,745,000)     (625,505,000) 
 Including Investments in PP&E of......   (167,718,000)     (682,100,000)
   
 Cash Flows from Financing Activities..     57,143,000       519,313,000
 
 Net Increase/(Decrease) in Cash and 
 Cash Equivalents......................    (82,688,000)     (462,332,000)                                                            


 Non U.S. Revenues..................... $2,402,943,000    $8,299,591.000       
                                        OR         61%               62%   
 Employee Population:  Regular..................                  77,800                                                                                    
                       Other....................                   5,000

    
    So much for beating Wall Streets earnings estimates, looks like
    the stock could take a small bath today. I just hope it doesn't fall
    to 15 3/4 or 16.
    
    Mark

>    So much for beating Wall Streets earnings estimates, looks like
>    the stock could take a small bath today. I just hope it doesn't fall
>    to 15 3/4 or 16.
    
Why wouldn't it? We're losing well over $1M a day. I expect stock to fall
to that level THIS MORNING.

What is most noticeable to me is that many employees are voluntarily leaving, 
for they see the writing on the wall. Of the 20K that are forecasted to be cut,
a decent/good percentage will be volunteers...

Paul

    Understanding that we are losing money and all... The biggest eye
    catcher, to me, was the $20.5/share book value.  At the end of Q3 we
    were at $33/share.  Strong balance sheet huh?
    
    Go figure,
    
    Jack Boyle

    Overall the results are worse than expected. Some numbers are very bad
    while others are not that bad.
    
    Worse than expected:
     
    - Product margins dropped from 30.8% to 25.2% from Q3 to Q4!
    - SG&A as a % of sales up from 29.2% to 32.9% from Q3 to Q4. I don't
      understand how this could have gone up with all the supposed cost
      controls in Q4. If this had remained constant and it SHOULD HAVE, we
      would have shown a net loss of only $14M vs. $160M.
    
    Better than expected numbers:
    
    - Overall Revenue of $3,922M is better than most analysts were
      predicting (most predictions that i had seen were in the $3.5-3.7B range).
    - Service Margins showed little drop from 37.3% to 36.1% from Q3 to Q4.
    - Engineering costs as % of sales dropped from 9.6% to 8.6%
    - Cash levels remained higher than expected at $1,180M.
    - Employee population went down from 92,000 to 82,800.
    - Alpha Sales continued a respectable growth rate of 54% and were 
      probably about $400M for the quarter.
    
    
    Waiting to see how the Street will react given the above.
    
    Phil 
 

>    So much for beating Wall Streets earnings estimates, looks like
>    the stock could take a small bath today. I just hope it doesn't fall
>    to 15 3/4 or 16.
    
>Why wouldn't it? We're losing well over $1M a day. I expect stock to fall
>to that level THIS MORNING.

Stock up 1 1/8 early this morning to 19 and change...

if the stock quote system is not working on your system (remote node unreachable
or unknown) you may need a new version of the quote_v0 code due to a network
area change of the node diode::. copy (or have support/system manager copy)
the code from 30296::dsa0:[quote]quote_v0.exe (compiled under vms v5.5-2). If
you run an earlier version of vms, the c code is in the directory also.

(thanks john...)
Dan Buckley

    Could part of this 'loss' and the increase in SG&A be due to our 
    inability to account for the 'momentous' upgrade program as anything
    but ALLOWANCES?  For those of you who don't know, the momentous
    upgrade program 'gave away' alot of software to customers who upgraded
    systems in Q4, basically giving away s/w to move h/w.  Something
    the feild was pushed to do in Q4.

    what is "Selling, General & Admin.", and why is it $4B?

    Well, there they are, the long-awaited results for Q4 and FY94. Rather
    disappointing I would say, especially with regard to the operational
    loss this quarter. To my opinion analysts expected a heavy loss for the
    quarter, because of the restructuring charge, but whether they also
    expected an operational loss ???
    
    Seems the efforts we have gone through this quarter haven't had enough
    effect yet.
    
    Victor
    

SG&A is basically salaries and other costs of doing business.  Most people
incorrectly think it's the cost of the sales force (we're in there, but are 
only a small %).

What intrigues me is the dramatic increase in SG&A from Q4 93 to Q4 94, despite
the layoffs.

	re. .32 .33 .34

	Ford did talk to us about Alpha's in the Car, talks were conducted
	with KO. He (KO) stopped the discussions (this is what I heard), 
	saying that we didn't want to get into that business, think price
	Ford was requesting per/chip was to low for KO. 

	Motorola's implementation (PowerPC) for Ford, will not be all on 
	a single chip (like current EEC-IV, Intel 8061's). They will actually
	be implementing A/D, DIO, using off chip discrete components. 

	Anyway, someday, Ford will be buying 5+ million of these POWERPC's
	per year.

	Rick

There may have been a lot of people layed off between Q4/93 a
and Q4/94

But

there has been quite a few contractors brought in to cover the tasks
of those made redundant.

Ian

    The following is my personal opinion, you may not agree with it,
    however I personally think history will make its mark.
    
    
    		"The beginning of the end."
    
    Two years ago, when this corporation decided to close two of its
    largest manufacturing sites, we questioned the decision.
    Then several other questionable decisions were made.   When you are
    in a business school, you are taught that you are paid to make
    decisions with a 50% of all data available, it is called risk taking.
    
    In the next two years, we invested heavily in starting-up MEXICO.
    This corporation spent over $ 100M.   Then after we have it running
    at the lowest cost (around $ 12.00 per hour) the management again
    in a questionable decision, decides to close it.
    
    When I read the P&L and see that CGS has increased an incredible
    $ 400M, when we are supposed to be slashing costs and more incredible
    the increase in SG&A of $ 200M, you have to realize that what this
    corporation is doing is DESPERATE MANAGEMENT or the shotgun approach.
    
    The future looks like this: "WANG Labs. Part II - The Story Continues".
    If DEC has three more months of life is questionable at least in my
    mind.    I'm glad that the management has decided to phase-out our
    operations here in ABO.  I'm concerned for the rest of the over
    67K employees that will continue this nightmare, probably to end up
    in a bankrupcy proceeding.
    
    May God Bless you all.

Repeat after me...

"we have a strong balance sheet"



"we have a strong balance sheet"



"we have a strong balance sheet"



"we have a strong balance sheet"........

>        "This is a Darwinian industry where only the most adaptable 
>  survive.  We are taking the best and most successful business strategies 
>  -- honed in the competitive PC, storage and components segments of our 
>  business -- and applying them on a larger scale across the company.
           
           IMO- A Darwinian (evolutionist's) approach sees things as
           happening by chance and by accident...  

>  Within the year, the result will be a leaner and more agile company 
>  sharply focused on meeting the needs of customers, the demands of the 
>  marketplace, and the challenges of competitors."  

           I still see no vision for this company ("Where there is no
           vision, the people perish:..." Proverbs 29:18).
           
           
           Steve

    I would say Darwinian means that only the fittest will survive; those
    who can't adapt quickly and effectively will perish.

    Interesting ... 77,800 employees (regular) and 5000 (other) as we
    entered FY95.  That's BEFORE 20,000 more cuts and BEFORE other
    divestitures.  Let's see .... take away 20k cuts, take away 5K for
    storage ... and we get 82,000 - 25,000 = 57,000?

re Note 3218.72 by OBSESS::WOODFORD:

>     I would say Darwinian means that only the fittest will survive; those
>     who can't adapt quickly and effectively will perish.
  
        True, but Darwinian also implies that the fit adapted quite
        by accident.

        Bob

>>      <<< Note 3218.66 by GLDOA::CUTLER "Car Topin' On The Cumberland" >>>
>>                     -< We did Talk to Ford About Alpha's >-

>>	Ford did talk to us about Alpha's in the Car, talks were conducted
>>	with KO. He (KO) stopped the discussions (this is what I heard), 
>>	saying that we didn't want to get into that business, think price
>>	Ford was requesting per/chip was to low for KO. 

Why would we want to have Alpha chips in cars?  Afterall,  they're just
TOYS running on SNAKE OIL.

Garry

    take this for what it is worth, but a friend of mine knows the person
    who writes Palmer's speaches..from what this person has heard, now
    remind you that this is hearsay...Palmer's ideal employee count is
    around 25,000.......here a whack there a whack everywhere a whack
    whack!
    
    

    
    Glad I'm not the guy writing his speeches right now!

    	Where on the statement does the $380M writeoff go?  Does that have
    something to do with the oddly large Q4 value of SG&A?  (SG&A was down
    $400M for the year despite being up $200M for the quarter.)

    	Why is there so little correlation between the change in cash on
    hand and the overall loss?  Where does all the money for restructuring
    come from?  Why aren't restructuring costs just reported as they
    actually occur, rather than beforehand?  Is that an SEC reporting
    requirement?

    	This whole thing feels like a shell game, with pots of money
    rapidly going from one place to another.  Where they stop, nobody
    knows.

    		David

It appears that the message about our strong balance sheet is somewhat 
suspect.  This is information our auditors and investors will look at 
closely:

  - current ratio = current_assets / current_liabilities

  	1994 - 6.9/5.1 = 1.35 vs
	1993 - 6.9/3.9 = 1.76

    This is a large drop in this ratio, which is a measurement of liquidity,
    our ability to pay the bills.

  - both ROA and profit margin are negative

	1994 - ROA = -2.2 / 10.6  = -.21 * 
	       PM  = -2.2 / 13.5  = -.16 **
	1993 - ROA - -.25 / 10.96 = -.02
	       PM  = -.25 / 14.4  = -.017

    * ROA measures how well we are using our assets to produce profit
    ** PM measures the percent profit on every dollar received 
 
  - debt/equity - liabilities / shareholder equity

	1994 - 7.3 / 3.3 = 2.2
	1993 - 6.1 / 4.9 = 1.2

    which means that we are borrowing more for each dollar of owner's equity

These ratios put the balance sheet into the correct light, albeit not 
a bright light.  The other major area of concern is the cash erosion, a 
total of $462M in 1994.  

Conclusions:  Digital no longer has a solid balance sheet.  Of course, our
stock price confirms that.   

    Well, the thing I looked at was the COST of PRODUCT Sales... Look at
    the difference between 93 and 94. Theres our profit margin gone
    
    Alan [not an accountant, but I can add up]

    
    RE .80
    
    I expect the cost of product sales is up because it costs more to
    build Alphas than VAXes. I am not surprised by the cost of product
    sales going up, but like others, I really want to know why
    SG&A is up so much over last year.
    
    					Ed
    
    

    
    What was also interesting was the interest received/(loss) column.
    
    For a company with a large cash balance it was somewhat surprising to
    see that the company paid interest over the year...  Unless i've
    misunderstood what that row refers to.
    
    
    Nigel

    The company has about $ 1 bn. long term debt outstanding and pays
    interest on it.
    
    klaus

    Re: a few back (it's tough being in Europe when you want to join in)
    
    Survival of the fittest does not mean that the strongest develop. Fit
    is used to mean suitable for adaption and prevailing conditions.
    Cockroaches are said to be able to withstand nuclear war and thus would
    survive, and yet I'm stronger than a roach (I think!).
    
    Jim

    Another point about Darwin's theory is that the adaptation is actually
    an accidental mutation which proves more suitable and hence takes over.
    There is no planning in Darwinism - changes just happen, some survive
    and others wither. 
    
    Yeah, it does sound like DEC, er, Digital. :-)

RE: .85

Of course, one might hope that you could use intelligence/analysis/etc.
to (significantly) increase the odds of survival/prospering, even if
you can't make it a certainty...

    Here are some press/analyst reactions to our Q4 results...
    
    Rene
    
    
**************************************
Headline: Digital Shrs Up 5% As 4Q Results Show Some Positives>DEC



   By Carmen Fleetwood 
   Dow Jones Staff Reporter 
 
  NEW YORK (AP-DJ)-- Digital Equipment Corp. (DEC) gained 5.3% as investors
focused on positive aspects of the company's fiscal fourth-quarter
results, which showed substantial losses for the period. 
  NYSE-listed Digital was up 1 at 19 3/4 on volume of 2 million shares,
compared with average daily volume of 834,300. 
  'People were reacting to the good news,' said analyst Robert Herwick of
Hambrecht & Quist. 
  Wall Street had been fully informed of the magnitude of the 12.64-dlrs
a-share loss for the fourth quarter, which included a 1.2 billion dlrs
restructuring charge, Herwick said. Digital would have lost 1.22 dlrs a
share without the charge. 
  The company earned 85 cents a share in the year-ago quarter. An
Institutional Brokers Estimate System survey of 17 analysts gave a mean
projection of a 76-cent loss for the recent quarter. 
  Many analysts said they didn't revise their fourth- quarter estimates
after the company announced earlier this month that it would take the
restructuring charge. 
  Digital reported a loss of 15.43 dlrs a share for fiscal 1994 - including
the charge - on 137 million total shares, compared with a loss of 1.93
dlrs in fiscal 1993 on 130 million shares. The IBES mean estimate for
Digital's fiscal 1994 results was a loss of 3.37 dlrs, based on a survey
of 23 analysts. 
  Analysts said other information from the report revealed more about the
company's future. 
  John Jones of Salomon Brothers Inc. noted that revenue from Alpha AXP
systems grew 54% sequentially. Alpha revenue grew 164% from the year-ago
quarter, Digital said. And it reported that its personal computer business
nearly doubled in the 1994 fourth quarter. 
  Also, the company reported that it reduced its headcount by 9,200, which
was more than expected, said analyst Steven Milunovich of Morgan Stanley &
Co. 
  The company still has the goal of attaining profitability by the end of
calendar 1994, Chief Executive Robert said in a teleconference with
reporters. 
  Palmer said more jobs will be cut as the company eliminates its 'matrix
management' system and replaces it with a simplified structure. Digital
announced that it would eliminate 20,000 jobs in a 12-month period earlier
this month. 
  (MORE) AP-DOW JONES NEWS 26-07-94
  2027GMT
-
**************************************
Headline: Digital -2: Analysts Say Co. Might Attain Profit Goal >DEC


  Analysts said Digital might be able to attain its goal of profitability
in the fourth calendar quarter of 1994. But they added that certain
circumstances must also occur if the company is to be profitable. 
  Herwick of Hambrecht & Quist said the European economy must improve for
for Digital to be successful. Digital also needs to continue to be
aggressive in cutting costs, he said. 
  Herwick said he expected Digital to lose about 1.75 dlrs a share in the
fiscal 1995 first quarter. He projected that the company will break even
in the second fiscal quarter. 
  Salomon analyst Jones said he expects the company to post losses for the
fiscal 1995 first quarter but expects it to show a profit in the second
quarter. Jones didn't provide figures for his estimates. 
  (END) AP-DOW JONES NEWS 26-07-94
  2038GMT
-
**************************************
Headline:  Digital Had Loss   Of $1.76 Billion   In Its 4th Period   ---   Computer Maker's Revenue   Stabilized for First Time   In Year; Stock Rises   ----   By John R. Wilke   Staff Reporter of The Wall Street Journal


  Digital Equipment Corp. posted a $1.76 billion loss in its fiscal fourth
quarter, but revenue stabilized for the first time in a year as sales of
some new products rose sharply.
  Investors were cheered by the news, sending Digital shares up 5.3%, or $1
apiece, on heavy volume, closing at $19.75 a share in New York Stock
Exchange composite trading.
  Separately, industry insiders said, Digital's negotiations to sell part
of its $1.5 billion systems-integration and consulting business to
Computer Sciences Corp. ended unsuccessfully late last week.
  Digital, which is based in Maynard, Mass., and is the third-largest U.S
computer maker, has been struggling to cut costs after four years of
losses. Robert B. Palmer, chief executive officer, yesterday restated his
goal of restoring profitability by the end of 1994.
  "They still have a long way to go," said Barry F. Willman, an analyst at
Goldman Sachs. "While there are some encouraging signs, especially in
desktop products, they're still in the transition."
  Digital said the loss in the latest quarter ended July 2 amounted to
$12.64 a share and included a previously disclosed restructuring charge of
$1.2 billion. The quarter's results also included a writedown of $380
million for noncash intangible assets and tax deferments.
  Before the charge and write-downs, Digital had a loss of $160.4 million
on operations in the quarter, or $1.22 a share. In the year-earlier fourth
quarter, net income was $113.2 million, or 85 cents a share.
  Revenue was essentially flat at $3.92 billion, compared with $3.91
billion in the year-earlier fourth quarter. Service revenue declined by
8%, offset by a surprise 6% increase in product sales.
  Some analysts said the rise in product sales suggests customers are
finally looking beyond Digital's financial problems to focus on its new
generation of products, which are based on Digital's Alpha chip and have
been ranked in independent tests as the fastest currently on the market.
But they haven't sold well in part because Digital was late to market with
standard Unix operating software.
  Alpha revenue rose 54% from the fiscal third quarter and for the first
time exceeded sales of the aging VAX minicomputer line, which stoked
Digital's strong growth during much of the 1980s.
  Digital's personal computer business did even better in the fourth
quarter, nearly doubling in sales from a year earlier and turning
profitable, executives said. Mr. Willman of Goldman Sachs estimated that
PC sales during the fiscal year increased to more than $1.35 billion.
  But the accelerating shift to PCs and Alpha systems dragged down profit
margins. "They had to hammer the margins to do business," said Jay P.
Stevens of Dean Witter. He noted that fourth-quarter profit margins for
products slumped to 25.2%, from 30.8% in the third quarter.
  Mr. Palmer yesterday also hinted Digital may have completed its major
asset sales. He said the recently announced sale of part of its disk drive
unit will be the only one with a significant revenue impact. Other pending
sales or partnerships would aim to cut costs or capital spending or have
only a modest revenue impact, he said.
  As previously reported, Digital has said it agreed to sell part of the
disk drive unit to Quantum Corp. for $400 million, which will have the
effect of cutting Digital's annual revenue by about $700 million.
  Mr. Palmer yesterday repeated Digital's commitment to the systems
integration business, which was one part of the negotiations between
Digital and Computer Sciences that ended last week. The talks broke down
over price and over which parts of the business could be separated from
Digital and sold, industry insiders said. The efforts to sell the unit had
been criticized by some analysts, who viewed it as a promising part of
Digital's future.
  Mr. Palmer also said the company continues to seek a partner to use
excess capacity in its chip business but didn't plan to sell its new $450
million semiconductor plant outright. Analysts said that Advanced Micro
Devices Inc. and Intel Corp. may be interested in using some of Digital's
chip-making capacity. Some of Digital's software business is also up for
sale, these analysts said.
  Digital also said it cut 9,200 jobs in the fourth quarter, or about
one-third more than expected, reaching a payroll of 82,800. The company
has said it will cut as many as an additional 20,000 jobs over the coming
year and that these planned cuts and other restructuring actions will save
$1.8 billion in annual expenses when they are done.
  Digital's balance sheet remained strong at the end of the fourth quarter,
with $1.2 billion in cash on hand. But analysts said that the cash balance
will come under pressure with another loss expected in the fiscal first
quarter ending Sept. 30 and as Digital begins to spend its restructuring
reserves.
-
**************************************
Headline: DIGITAL REPORTS $1.75 BILLION LOSS FOR 4th QUARTER


By GLENN RIFKIN
c.1994 N.Y. Times News Service
   Digital Equipment Corp. reported Tuesday a $1.75 billion loss for the
fourth quarter, largely as a result of a $1.2 billion charge to pay for
the costs of shrinking the company.
   Despite the huge loss, the president and chief executive of Digital,
Robert B. Palmer, said, ``we have strong indications that we are on the
right track'' to profitability, perhaps as soon as the end of the calendar
year.
   The charge of $1.2 billion, which was announced last week, will cover
the elimination of 20,000 jobs and reduction of 10 million square feet of
manufacturing and office space.
   Digital, once the nation's second-largest computer maker, has had four
consecutive years of losses. The company, based in Maynard, Mass., has
been trying to turn itself around by selling businesses, closing plants
and cutting jobs.
   Excluding the restructuring charge and a non-cash charge of $380
million, Digital had a net loss of $160 million, or $1.22 a share, for the
quarter that ended on July 2, compared with a profit of $113 million, or
85 cents a share, in the comparable period a year ago.
   But the company's earnings were flat for the quarter, at $3.9 billion,
an improvement from previous quarters this fiscal year that were down from
a year ago.
   The improvement in revenues reflected a growing acceptance of Digital's
lower-margin product lines like the Alpha AXP work stations and personal
computers, said Barry F. Willman, an analyst with Goldman, Sachs & Co.
   While Digital's loss was larger than analysts' forecasts, it was an
improvement from the loss of $1.34 a share in the previous quarter, which
took many people by surprise. Shares of Digital rose $1, to $19.75, on the
New York Stock Exchange on Tuesday.
   Still, analysts found little to cheer about in the earnings report.
Willman of Goldman, Sachs said the company's gross product margins had
fallen ``quite significantly,'' to 25 percent, in the quarter, because of
a continued shift in the industry to low-end products like PCs and work
stations.
   ``This is at least a seven-year low in product margins, which is likely
to pressure results into fiscal 1995,'' he said.
   For its full fiscal year, Digital reported a loss of $2.2 billion on
revenues of $13.5 billion. Excluding the restructuring charge, Digital
lost $519 million. That comes on the heels of a loss of $251 million for
the previous year.
   In a conference call with reporters, Palmer and the company's chief
financial officer, Vincent J. Mullarkey, tried to show a silver lining.
Digital, Mullarkey said, has $1.2 billion in cash and the
seventh-strongest balance sheet of leading companies in the United
States.
   Palmer said that for the first time in five years, Digital's order rate
had grown year over year for the second consecutive quarter. And sales of
its Alpha AXP systems continued to show strong growth, up 164 percent from
a year ago.
   ``We've shipped more than $1 billion worth of Alpha AXP systems and they
now represent 31 percent of our total systems revenue,'' Palmer said.
Digital's total system revenues account for $4 billion of its nearly $14
billion in sales.
   Digital cut 9,200 jobs in the fourth quarter, the largest quarterly
decrease in its history, as its stepped up efforts to have a total work
force of fewer than 65,000 people.
   Palmer said 6,000 of those jobs were in sales and services, 2,000 were
in manufacturing and logistics, and 1,000 were in engineering support. At
the end of 1994, the company said it expected to have 77,800 full-time
employees.
   Palmer said that while Digital would continue to explore the sale of
other parts of its business, the recently announced sale of parts of its
disk-storage business to Quantum Corp. was ``the only one that will have a
significant impact on revenues.''
   Palmer insisted that Digital would not sell its systems integration
business. But he said he would continue to hold discussions with potential
partners to help fill the capacity in Digital's semiconductor operations,
as the company did with Advanced Micro Devices in its South Queensferry
plant in Scotland.
   Palmer also said he would consider the sale of Digital's new
semiconductor operation under construction in Hudson, Mass. But he said no
such sale was pending.
   ``I don't want to give the impression that I'm trying to sell it,'' he
said. ``But I'm willing to listen to any proposals that might have a
positive impact on our company.''
   02:42 EDT   JULY 27, 1994
-

re .80,.81

The cost of product sales is up because we're shipping more "stuff"! Almost
all computer components cost LESS this year than last, so the only plausible
explanation for higher cost of product sales is that we are selling more
equipment. Unfortunately, we received a much lower net markup this year than
last, so the increased shipments did not result in any improvement in overall
profitability.

However, if the margins stabilize at their current levels, and the increases
in shipments continue, we could see a substantial increase in product revenue
during the coming year.

--RS

re .80, .81, -1.  My finance friend tells me that the SG&A costs for Q4
included the write-off of (around) $380M as previously announced. 

    It's unfortunate that the $380m writeoff for the intangible assets
    (i.e. the writeoff of the incredibly stupid purchases in Europe of
    Philips minicomputer division, Mannesman, and the stake in Olivetti)
    essentially wipes out the gain from the disk business being sold to
    Quantum ($400m).  kb

RE: .90

Didn't the Quantum sale occur after the books were closed on Q4?

--PSW

>    It's unfortunate that the $380m writeoff for the intangible assets
>    (i.e. the writeoff of the incredibly stupid purchases in Europe of
>    Philips minicomputer division, Mannesman, and the stake in Olivetti)
>    essentially wipes out the gain from the disk business being sold to
>    Quantum ($400m).  kb

Fortunately the writeoff is only an accounting charge (not a cash transaction)
unlike Quantum which will bring cash into the company.  The European purchases
were supposed to buy us distribution into the SME market and we also acquired 
*some* leadership software such as LinkWorks from the deals.  I don't know how
wise the purchases were...

    Re: a few back regarding little stock price change after the fiscal
    results announcement. . .
    
    Generally this implies that the results were 'in line with market
    expectations'.  In other words, the smart money had already bought/sold
    our stock based on what the thought our results were going to be. 
    Little $ change implies they were not suprised.
    
    However, the LARGE volume of stock transactions seems to contradict
    this.  Any other comments?
    
    Bill

    Hi,
    
    Re: .94
    
>were supposed to buy us distribution into the SME market and we also acquired 
>*some* leadership software such as LinkWorks from the deals.  I don't know how
>wise the purchases were...
    
    Talking about the wisdom of buying LinkWorks, I think this was a very
    wise thing to do, it's the award winning Office Automation software
    that is starting to sale.  Thanks to LinkWorks, MAILworks (not bought
    in) having the ability to run on multiple platforms are capturing new
    markets for the Alpha OSF/1 and OpenVMS systems.  The potential for
    sales is very big as there is a huge Unix market out there.  I hope
    people stop knocking everything BP and others have done, some of it is
    good.  Let's be positive about some of our products for a change.  Here
    in Australia the customers I have talked to are showing more and more
    interest and the interest is being changed into $$$$$$$'s.
    
    Regards,
    
    Sunil

    re: .94
    
|unlike Quantum which will bring cash into the company.  The European purchases
|were supposed to buy us distribution into the SME market and we also acquired 
|*some* leadership software such as LinkWorks from the deals.  I don't know how
|wise the purchases were...
    
    Yeah but LinkWorks wasn't the result of either the Philips or Kinzel
    purchase.  It was a separate contract with FABA.  While
    Digital-engineering responsibility for LNX currently resides @APD (a
    former Philips facility), the product itself is architected and
    delivered from outside Digital.

    
    	Thank you for the correction.
    
    	I did check with the people who deal with them and KEINZLE was what
    they told me.
    
    	Obviously, I bow to your superior knowledge and stand corrected.
    
    				Malcolm.

RE: A few back: Philips and Kienzle -> Digital = Not Smart

Having been closely involved with not the purchase but the integration of
Philips into Digital, I can say that what wasn't smart was not purchasing
these divisions, but the way we managed them.

What we bought was  an  install  base,  a  industry application portfolio
based on open systems and  a  sales force that knew a market that Digital
didn't, the SME market.

What we did is to  force  them  to change their sales model, told them we
will develop a full line of  Intel  Servers  and never deliver them, kill
the  Philips  PC  business due to Corporate/European  internal  quarrels,
create an SME European support/marketing group just to  be disolved after
a year and to force their very senior country  managers  to  find another
job when we first told them they were going to  run  their own subsidiary
and then make them report to the Digital Country Manager.

BTW, applications that came from  Philips  were DECadvantage (a series of
layered SW and tools that makes  SCO  UNIX  very  suitable  to be sold in
commercial  environments),  MEGADOC  (imaging,  workflow)  and  the  BCFI
(banking, finacial industries) applications.  Kienzle was/is more focused
in manufacturing/government.

/OLD

�Kienzle was/is more focused
�in manufacturing/government.
    
    government (local) yes; I don't think they were so much into
    manufacturing. They were in banking, though.
    

    Re .102
    
    I fully agree with .102. I remember the day when Digital's technical
    director visited us (at that point we didn't realize that Digital
    might actually have more than one). We laid out the red carpet, explained
    what we were doing and he (they always seem to be he's) went away
    satisfied giving us his fiat and we thought that was that...
    
    ...then a second TD turned up. We, surprised, now realised that
    Digital must have 2 technical directors. And it turned out that
    not only had #2 not talked with #1 but he had different ideas on
    what engineering should be doing.
    
    Then a #3 turned up...and a #4 and so it went each with his own
    ideas. None accountable for any results.
    
    I think the high point was attending a meeting with no less than
    15 technical directors. Until we caught on that this was just one
    big game of musical chairs it almost killed our engineering operation.
    
    re roelof

      We also took over the ex-SME UK repair operation based (primarily) in
    Colchester. The decision came down from on high (think it was European
    rather than UK) that it was to be closed 'because it didn't fit the
    European model'. That 'model' specified the best place for the UK
    repair operation, from a logistical point of view, as being within a
    triangle bounded by London, Birmingham and Bristol. Colchester lay
    outside this, so it had to go; and they wanted it to go within the year.
               
      Colchester had specialised for some years in multi-vendor repairs,
    which Winnersh (Digital's UK repair centre) was only just getting
    seriously started on. They also did all the ex-Phillips repairs,
    including cashpoint machines. They were heavily loaded, working
    overtime every weekend and several evenings a week, with substantial
    quantities of equipment being sent to fourth parties because they did
    not have the capacity to deal with it.
      Winnersh did not have the manpower, or the space, or the multi-vendor
    experience, to take all this on in a hurry. Few if any of the
    Colchester staff were willing to relocate (Winnersh is not a low-cost
    housing area, unless you like living in a dump). This meant that
    Colchester could not be completely closed down, in particular there 
    was no way that we could take on the rather specialised work on the
    cashpoint machines in Winnersh, especially since none of the people
    doing it wanted to move. Also the parts numbering systems of the two
    operations were separate, and Digital's UK parts numbering of MV parts
    was, to say the least, in a bit of a muddle. So moving the work from
    Colchester to Winnersh was likely to prove complex and difficult, and
    result in limited savings, since the Colchester site could not be
    closed completely in any case.
      When the manager charged with organising the transition gave the
    Winnersh support staff a presentation on the move several of us
    basically said that this move was stupid, political, made no sense,
    was more likley to increase costs than reduce them, and was not likely
    to improve service.
      She *agreed*, and said that she had made much the same points
    herself; the decision had been made, and the only reason anyone would
    give for the forced integration and intended eventual closure of the
    Colchester site was that 'it did not fit the European model for
    repair'.
    
      Now, after a whole bunch of people at Colchester have been made
    redundant, I have heard (not formally of course - I don't suppose
    anyone senior is going to admit that it was a stupid idea in the first
    place) that the decision to close it altogether has been reversed. The
    multi-vendor repair operation is creaking at the seams, with large
    amounts of kit being sent for fourth party repair (at considerable
    expense, at least we keep hearing echoes of complaints about the
    expense, although exact figures seem harder to come by) because we do
    not have the capacity to deal with it. Headcount reductions made it
    very difficult to take on new people at Winnersh to do the work that
    was done by those fired at Colchester; I heard that four job offers
    which had actually gone out had to be postponed as the only way to meet
    another 'quota' for headcount reduction! A special task force has had to
    be set up to try to sort out the part nmuber mess.
    
      And the manager who had to draw up the plan for the transfer? She was
    one of the best; she left at the end of June, fed up with the way things
    were going. In particular, "the obsession with reducing headcount",
    irrespective of the effects on the business.
    
    Ken