| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 3303.1 | Duff & Phelps upgrades Digital | STOWOA::LISOWSKI | Witold Lisowski @OGO | Wed Aug 03 1994 12:32 | 24 |
|
Duff & Phelps analyst, Marty Ressinger, upgraded Digital from a
"Sell" to a "Buy" earlier this week.
Below is an excerpt of his comments that ran over the wire.
Digital Becomes Attractive Turnaround Story
We believe Digital is finally turning around and have raised our
recommendation to BUY from Source of Funds. Our estimates
indicate a 12-month price target of $27, nearly 40% above the
current price. We think the Company finally has a workable
turnaround plan and the commitment to carry it out. We expect
break-even in 2Q (December) and a profit for FY95, with real
earnings in subsequent years. Factors turning us positive
include: 1) strengthening product sales, 2) the restructuring
announced in mid-July, and most importantly 3) confidence in new
people running Digital's finances. Similarities with IBM's
turnaround are starting to show, and as they do, investor
sentiment could rapidly turn very positive.
|
| 3303.2 | | ASDG::CORLISS | | Wed Aug 03 1994 15:29 | 5 |
| re:.1
can you include the complete text of the Duff & Phelps report?
Dc
|
| 3303.3 | The good, the bad, and the ugly | SWAM2::GOLDMAN_MA | Blondes have more Brains! | Wed Aug 03 1994 19:00 | 13 |
| What a week --
The good = Duff & Phelps.
The bad = S&P
The ugly = Monday 8/1/94
Seems like the financial community is a divided in sentiment as Digital
itself. I anticipate more of the same from them -- polar opposites are
going to abound in analyses of Digital's future for a while. Only time
will really tell.
M.
|
| 3303.4 | Yes, the financials are poised for improvement | ISLNDS::HUTNICK | | Thu Aug 04 1994 15:48 | 9 |
| if you take 20,000 employees x approx $100K (salary and burder)/year
out of Digital's expense side and keep the revenues at the current
level, I can see why the analysts are predicting breakeven and then
profit. In addition, any further plant closings and other high asset
ownership will further improve the bottom line.
But then again, like it's been said many times, the revenues must be
sustained and let's hope we haven't 'over' downsized or re-engineered.
Mark
|
| 3303.5 | | WMOIS::DIXON | | Thu Aug 04 1994 16:32 | 10 |
| .4 Easy with the 100K assumption.
Back up your logic to when we had 137K employees and $14b in revenue.
We have decreased 55,000 employees ,kept the revenue side relatively
flat and managed to only generate a $ 2.1B loss for last year.
Question: If 55,ooo didn't solve the profit problem then how will
another 20,000 generate a profit.
Insanity is doing the same thing over and over and expecting a delta
in the results!
As noters have mentioned : Where is the "revenue" side of the return
to profitability plan?
|
| 3303.6 | | GRANMA::MWANNEMACHER | daddyneverwasthecadillackind | Thu Aug 04 1994 16:57 | 5 |
|
RE: .5 Excellent question.
Mike
|
| 3303.7 | Little savings happened pre-FY93 | ENQUE::TAMER | | Thu Aug 04 1994 17:16 | 16 |
| if you look at the SG&A and Engineering costs for the last 4 Fiscal
years, you find that no savings (even these increased) happened at all
pre-BP reign.
BP did pretty good for the first 3 or 4 quarters in reducing these
expenses (these combined expenses were reduced by $458M and $1,032M in
FY93 and FY94, respectively).
He made the mistake of not keeping up the rate of those reductions in
Q1-Q3 of FY94 while we were losing about an almost-unheard-of 13% of
margins on products.
Because of this, Digital is now forced to cut expenses in 3 quarters
instead of doing it rationally (and under much less pressure) in 6-8
quarters.
|