Conference 7.286::digital

    >        Digital today confirmed that it has sold on the open market all
    >   98,533,000 shares it owned of the common stock of Ing. Olivetti & C.
    >   S.p.a. ("Olivetti").
    
     	And did we make a loss on this too?  I seem to remember that we
    paid over the top when we bought them.
    
    				Malcolm.

From my files...:
**********************
Author:	Mary Hoffmann @MRO            
Date:	26-Jun-1992
Posted-date: 26-Jun-1992
Subject: OLIVETTI RELEASE                                                        



THE FOLLOWING RELEASE HAS JUST GONE OUT ON THE 'PR NEWSWIRE'
AND 'BUSINESS WIRE'.






Dallas Kirk
(508) 493-4562





         OLIVETTI AND DIGITAL ANNOUNCE A STRATEGIC ALLIANCE


Ivrea, 26th June, 1992: Digital Equipment Corporation and Olivetti 
today announced a significant business alliance which will extend 
Olivetti's system offering to include Digital's powerful new Alpha 
RISC technology.
     Digital has also reached agreement with CIR, to become a 
shareholder in Olivetti.  This represents a long term association 
between Digital and CIR that will contribute to the development of 
Olivetti as an independent leading Information Technology company.
     Digital will acquire from the members of the shareholders group 
20.250.000 shares (4.03%) of Olivetti common stock for a total 
consideration of Italian Lira 172,125 billion. Digital has also 
agreed to purchase from the members of the shareholders group, an 
additional 20.250.000 shares (4.03%) of Olivetti common stock for 
the same consideration before the end of 1994, consistent with the 
progress of the alliance. Furthermore, Digital has agreed to 
purchase on the open market within June 1993, an additional 
9.500.000 shares (1.89%) of Olivetti common stock.
     Under the terms of the agreement, Alpha will become a strategic 
architecture for future Olivetti products. Digital will supply chips 
and system platforms based on its Alpha RISC technology, and 
networking software.  



     Digital announced Alpha in February, as the industry's most 
advanced 64-bit reduced instruction set computing (RISC) 
architecture, designed to be fast, reliable and open. Since then 
Alpha has achieved growing acceptance as a leading RISC technology, 
with more than six hundred independent software developers publicly 
committed to move their offerings to the Alpha platform. 
     Most recently, Microsoft announced during DECworld, Digital's 
world-wide sales and marketing event, that it will port its widely 
accepted Windows NT software product to Alpha-based technology.  
     The agreement also represents a significant extension to the 
current Digital-Olivetti technology and OEM agreements covering PCs, 
workstations, and networking, as well as joint research efforts into 
multimedia applications and communications being conducted at 
Olivetti's Cambridge, UK research laboratories.
     "Digital's Alpha technology is the logical evolution of our 
RISC strategy, particularly when it comes to operating systems such 
as Windows NT and UNIX, and also applications software," said 
Elserino Piol, Olivetti's chief operating officer. "We will continue 
to implement our strategy as it was presented at our `Olivetti Week' 
in Rome, and we are convinced that this move will strengthen our 
position as a leading global supplier of Information Technology 
solutions ranging from individual workstations to Enterprise-wide 
systems."
     "Digital's decision to invest in Olivetti, reflects our deep 
belief that a shared technology strategy creates significant value 
for customers of both companies by providing them with a choice of 
innovative technologies, and our determination to lead the 
development of industry standards," said Kenneth H. Olsen, 
president, Digital Equipment Corporation.



     "Digital's investment in Olivetti cements our long-term 
commitment to provide significant technological benefits to all our 
customers," said Carlo De Benedetti. "We are both committed to a 
common Open Systems strategy, to build capabilities in specific 
areas of excellence, to preserve the independence of individual 
market strategies, and to ensure customers that no matter who they 
purchase products from, the underlying technology will conform to 
open industry standards."
     Carlo De Benedetti also emphasized that "CIR will continue to 
hold the largest share of Olivetti's equity which is consistent with 
its long term commitment to manage Olivetti's business."
     Digital will have up to two senior executives sitting on 
Olivetti's Board as the alliance progresses.
     "The alliance significantly expands the reach of Digital's 
technology strategy, and in particular, our Alpha RISC 
architecture." said Pier Carlo Falotti, president and CEO of Digital 
Equipment Corporation, Europe. "It brings the long-term benefits of 
Alpha to a large number of Olivetti's customers through Olivetti's 
extensive range of open system." 
     This alliance marks an important step in the implementation of 
Olivetti's vision for the 90's. It is consistent with Olivetti's 
strategy of building its offering by adopting and integrating the 
best available technologies in a coherent architecture, Olivetti was 
among the first in the industry to understand the strategic 
implications of Open Systems and it has developed a complete system 
offering by integrating its own and other partners' technologies and 
products to develop a powerful set of solutions for a wide range of 
applications.



As a result, Olivetti's current offering will continue within the 
framework of the Open System Architecture, and it will add to its 
long term competitiveness by taking advantage of the Alpha 
technology.
     Olivetti, headquartered in Ivrea, is the leading European-based 
information technology group. It is active at the forefront of the 
computer and office automation industries, with innovative products 
ranging from personal computers to specialized workstations and 
networked servers. The Group Commercial subsidiaries and a technical 
assistance organization operate in over 30 countries through 4,500 
dealers and 1,000 Systems Partners.
     Digital Equipment Corporation, headquartered in Maynard, 
Massachusetts, is the leading worldwide supplier of networked 
computer systems, software and services.  Digital pioneered and 
leads the industry in interactive, distributed and multi-vendor 
computing.  Digital and its partners deliver the power to use the 
best integrated solutions - from desktop to data center - in open 
information environments. 
                               [ends].

    
    
    
    Did we make any money on the sale ?
    
    (Purchase Price v Sale Price)
    
    
    This company is on a serious diet these days, and has been for a while,
    the Olivetti sale looks like a case of corporate bulimia, which in
    large doses can lead to terminal anorexia.
    
    Looking on the bright side, we put a little weight on last week, a few
    corporate ounces, the shares proice went up to 23+.
    
    Doctor McGaughrin
    
    

    
    
    If anyone is good at sums, the share price from yesterday was...
    
                                                     
    digital                   24-Aug-94                      LIVE WIRE
           Stock quotes as of 23rd AUGUST 1994       
         
            Company Name       Today's Stock price        Difference      
         
                      DIGITAL          $ 22 7/8           DOWN 1/4        
              HEWLETT PACKARD          $ 87 3/4           UP 1/8          
                          IBM          $ 67 5/8           DOWN 1/8        
                     OLIVETTI       LIRA 2360             DOWN 30         
                      SIEMENS         DM 678              DOWN 6          
         
    
    
    
    	

    
    	My calculations estimate Digital got $232,537,000+ for its Olivetti
    stock. If memory serves, I believe we paid approximately $480,000,000
    for the same amount.
    	In short, we got hosed.
    
    		the Greyhawk

    Well, I guess it could be worse, we could have bought our own stock
    and be selling it now. :-(
    
    Harry
    

    Why do you think we got hosed? It's like any other investment. If you
    buy low and sell high, you make a profit; if you buy high and sell low,
    you make a loss. When you say we got hosed, it implied that "someone"
    or some "entity' did something to hose us. If you make an intelligent
    investment that simply turns out wrong, that does not mean you got
    hosed, only that you made a mistake, and therefore a bad investment,
    not that someone hosed us.

re: Note 3346.5 by POBOX::CORSON 

>    	My calculations estimate Digital got $232,537,000+ for its Olivetti
>    stock. If memory serves, I believe we paid approximately $480,000,000
>    for the same amount.

I don't know how much we paid for the stock, but it seems like we sold it
for about $144M.

$1 = 1565 lira
1 share of Olivetti = 2360 lira
1 share of Olivetti = $1.51

so 98.533M shares * $1.51 = $144M 

I never understood why we bought the share originally. I don't think it was
thought to be a good business investment by itself. We did sell re-badge and
sell some of their products in Europe and recently they announced systems
based on AXP processors.  But I don't think in the long run that it was all
that good of a deal.

I wonder if this is part of the $350M charge we took last quarter.

-Bruce

    I read a news item this afternoon that said, in short:
    
    We did not sell the stock on the open market and we are not, at this
    time disclosing what we got for it. We paid well over market value when
    we bought the stock because we were buying goodwill, we sold for more
    than the market value was at purchase time so the loss is entirely
    in intangibles and yes, all or most of this loss is already accounted for 
    in the $400M charge we took last year.
    
    Full details are supposed to appear in the Annual Report. 

    this must rate well as one of those profoundly visionary decisions-like
    the Philips purchase.I wonder whether the people who made the decision
    have had to swallow the pill like the rest of us would if we had
    missed,for example a project budget by 5000 dollars?
    Answers on a postcard to
    Doing-very-nicely-as-a-VP Inc
    Cayman Islands

    
    	The most strange part of this story is that while we are selling
    our stock, Olivetti's stock quotes rised �200 (circa 10%) in the last
    week (according to the UK live-wire)... 
    
    	According to .9 we are not selling for the normal price. I can't
    know what is the price, but if my memory serves well, the current
    Olivetti's price is 3 times lower than what we paid.
    
    	Somebody able to help me understand?
    
    �AA

    The Wall Stret Journal today says we got $140M for the shares, which
    cost us $287M, a premium over the market price value of a total of
    $84 million.  Claims Olivetti only sold $80.2M worth of AXP systems,
    and purchased only about $7M worth of AXP product for resale.
    
    Mark
    

re .9:

>    We did not sell the stock on the open market and we are not, at this
>    time disclosing what we got for it.

Tell it to Livewire.  The Livewire article says we did sell it on the
open market.

    re .12
    
    Marc,
    
    I think the WSJ meant that Olivetti got $80.2M revenue by
    Digital reselling/purchasing Olivetti equipment but Digital sold only
    ~ $6.33M to Olivetti.
    
    All in all we got creamed by the Olivetti, Philips, and Kinezle (sp ?)
    deals. All people involved in these deals should be either out or shown
    the closest door (or preferrably window).
    
     

    
    Chicago Tribune says we got $142 million for the stock. Must need
    an infusion of cash to sell at a loss.
    
    Mark

    
    OK, my math stinks. Read the WSJ story today. They are probably right
    on the money. Still rest on my original statement that we got hosed
    bigtime. But look at the bright side - if the Europeans are so much
    better at this stuff that we, I feel much better that many of them are
    now running significant pieces of Digital. Maybe my kids can go to
    college after all.
    
    		the Greyhawk

    
    
     This is definetly getting confusing,
    
    "The Boston Herald reported we sold 145 million in Olivetti
     stock that we paid 85 million for?"
    
     now where did they get that info?
    
    
    BS

re: Note 3346.17 by PCBUOA::SWANEY 
    
>     This is definetly getting confusing,
    
>    "The Boston Herald reported we sold 145 million in Olivetti
>     stock that we paid 85 million for?"
>    
>     now where did they get that info?
    
    Maybe they are all having trouble converting Lira/$'s in 1992 to Lira/$'s 
    now?  Plus it seems like we have more shares than we did at the time of
    the original buy.
    
    -Bruce
    

    re. -2
    
    The DEC stock purchase in Olivetti was recorded at $85.4 million, with
    an additional amount recorded at $204 million for intangibles (i.e.
    business investment)
    
    The stock sold somewhere between $130-$150 million (no exact figures
    released) so there was a profit made on the actual stock. However, the $204
    million investment has to be written down, and approx. 1/2 has been
    written off so far.
    
    Same results as in previous threads - just the accounting angle on the
    transactions
    
    source - today's Boston Globe
                

re: .14

>    All in all we got creamed by the Olivetti, Philips, and Kinezle (sp ?)
>    deals. All people involved in these deals should be either out or shown
>    the closest door (or preferrably window).
    
Weren't these purchases all thought up by Pier Carlo ("we don't need any women
here, we all have them at home") Falotti?  He's no longer around...

								- paul

this is most interesting, So how many employees have
to leave beacuse the BOD approved these loses. NO VPs
of course.

/ejr
 

    if memory serves me correct: 
    
    Kienzle GY deal 	VP's involved...   Hans Dirkmann     (still around)
    					   J�rg Rieder        left in 1993
    					   Pier Carlo Falotti left in 1993 
    Olivetti deal                          Pier Carlo Falotti left in 1993
    Philips Information Systems            Pier Carlo Falotti left in 1993
    					   Per Olov Loof      left in 1994
    					   Wolfgang J�ger     left in 1994
    					   Werner Oppliger    left in 1994
    so at least 5 VP's left, however...
    if any of those left because of the deals - who knows....

    From UK LIVE WIRE:
    
        LITTLE REWARD FOR A DIGITAL RISC
    
        Digital's decision to sell its 7.9% stake in Olivetti at a heavy loss
        comes as no surprise.  Digital first bought 20 million Olivetti shares
        at a premium to the market price in June 1992, and then increased its
        stake gradually with further market purchases, for a total of $287.8 mn
        dollars.  Digital has not said the price at which the shares were sold
        during late July and August but Wall Street analysts estimate that the
        sale of the stake would have raised between $140 mn and $150 mn.
    
        Financial Times, London.  30th August 1994
    
    

    re .22
    
    That must have been a fulltime job, keeping track of the VP's we employ
    
    Henny

    Someone needs to check out the meal receipts
    

    It's ironic to mention checking on meal receipts in this topic 8^(

    No it is deliberate, more then ironic, you hit right on the head with
    penny wise, and pound foolish.  I am traveling this week so it gripes
    me, more then ususal, especially after seeing the delta of what we
    sold versus what we paid.