Conference 7.286::digital

    See 4198.23; Compaq passed DEC in revenue three quarters ago.

    From the April 29, 1996 Fortune 500 Edition: p. F-47
    
    Computers, Office Equipment (24 Companies) ranked by Revenues
    
    	Company		Revenues	% Change 
    			($ millions)	from 1994
    
    1.  IBM		71,940		12
    2.	HP		31,519		26
    3.	Compaq		14,755		36
    4.	DEC		13,813		 3
    5.	Apple		11,062		20
    6.	SUN		 5,902		26
    7.	Dell		 5,296		52
    8.	Seagate		 4,540		30
    9.	Pitney Bowes	 3,861		 1
    10.	Gateway 2000	 3,676		36
    11.	Quantum		 3,368		58
    12.	SCI Systems	 2,674		41
    13.	AST Research	 2,468		 4
    14.	Tandem		 2,285		 8
    15.	SGI		 2,228		50
    16.	Lexmark		 2,158		16
    17.	Western Digital	 2,131		38
    18.	Cisco		 1,979		59
    19.	Storage Tech.	 1,929		19
    20.	EMC		 1,921		39
    21.	Amdahl		 1,516		(7)
    22.	Data General	 1,159		 3
    23.	Integraph	 1,098		 5
    24.	Maxtor		   907		(21)
    
    Total		194,185		
    
    Median		  2,571		23
    

    Isn't it nice to know that some things never change (Digital 3% growth)?
    
    At least we're growing faster than Pitney Bowes - and we seem to be
    giving Data General a run for the money.
    
    But - not to worry - our new partners will take care of us.

A more positive spin ...

We have sold off: Disks, RDB, Terminals, ... 

Layed off many revenue generating consultants etc. 

We are a much smaller Company than we were a few years ago and
yet are still able to post actual revenue growth. 

Could be a lot worse!

M

> A more positive spin ...

FY96 is showing some real revenue growth. For the first 9 months of FY96,
our Product sales are up 14% and our total operating revenue is up 8%.

While the percent increases are not as good as many of our competitors,
they are moving in the right direction.

-Bruce

    
    Given the sell offs of business, we are growing revenue in double
    digits on a comparable basis in products we had during both time
    periods - and our high end product lines are bringing greatly improved
    MARGINS. If anything, the Services business is laggard = wrestling with
    end of VAX era stream and need to reskill/deploy workforce for
    integration business.  
    
    OVerall, things are progressing - it would be nice to be higher ranked
    in revenue - but better to be higher ranked on profit and EPS - and we
    have room to improve there too.
    
    BT

    And now the rest of the story......
    
    Revenues: $13,813.
    % change: 3%
    Profits: $122
    % change: - (we lost money previously)
    Profits as a % of:
    	Revenues: 1
    	Assets: 1
    	Stockholders Equity: 3
    Earnings/share 1985-1995 annual rate %: (17)
    Total return to investors '85-'95: (0)
      "    "     "    " 1995: 93%
    Employees and % change from 1994: 61,700  (21%) was the highest
    workforce reduction as a % of total employees of any computer, office
    equipment concern

I suspect .3 includes all revenues, including non-computer stuff.

re: topic title

> No money in PC's!  Compaq passed all of DEC

No money in PC's for companies that don't know how to compete there...

__Mark

                              
    Hmm....
    
    lets see now. More than 40% increase in revenue, just 8ish % profit
    increase. Margins coming down. Frankly, I'd rather work for a company
    where (again) we increased margins. It's margin that pays for
    eveything, not revenue.
    
    Extrapolating (very!) sloppily, if Compaq's margins continue to decline this
    way, then in about 2 years they will need almost infinite revenue to break
    even. Of course, if they *only* sold very high margin stuff (Proliants, sexy
    laptops), then they would be spectacularly profitable, but with revenue
    way, way under half the present level. Hey ! A viable strategy for the
    PCBU ?
            
    Based on Compaq's current business model and product mix, a wobble on the
    revenue side will seriously hose the share price. If the margin drops just
    a few more points, then any revenue wobble could be almost fatal. Don't 
    beleive ? Just look at that 'niche player' - Apple computer with around
    $11billion revenue, and margins just under 20% before the recent hoo-hah..
    
    Let Compaq scream past us on revenue. Worry about margin and net
    contribution here instead. 
    
    

    re .11

    fyi - One news report I read attributed the margin decline at least in
    part to pressure on COMPAQ's more profitable server business from the
    likes of IBM and HP. Since I have no other information, I can only hope
    that Digital is also there.

    - Bob

Hi,

It doesn't follow that low-margin == low-profit

The textbook example is the Supermarket and Jeweler. Food is sold at about 1%
margin whereas diamonds about 80%. Usually Supermarkets are a more
profitable business. (UK examples might be Sainsbury vs Ratners).

M

    we aren't in the food or jewellery business.
    
    If I chose to invest in, say, a food stock, then I would look at the
    most profitable within that market segment. Margin has a big part to
    play there. And, in food, I'd probably choose Marks & Spencer (UK
    outfit) or someone else with *high margins*. btw, M&S have quite a small    
    share of the total UK food market.....
    
    And, whatever market you are in, declining margin is probably badness
    ?..
    
    AW
    
    

    When you don't have much to talk about in earnings or revenue growth,
    you talk about margins, cash, headcount, and other things.  While
    they're also important, they're usually considered secondary
    indicators of a company's performance.  .02 k

    And a little off the subject, by not by much...
    Intel just announced that they would be cutting price on Pentiums by
    as much as 25%.  So, Digital may be forced to cut price on Alphas -
    which may just blow away the margin argument.

Personally, I would tend to view revenue growth as a leading indicator,
and profitability as a trailing indicator.  (Digital dug itself a really
good hole based on selling profitable systems in the late '80s.)

    re: .17
    
    I agree, particularly when you have relatively small market share that
    you're trying to grow to survive long-term.  It appears that Compaq
    made that tradeoff last qtr (margin for growth), and we're going to
    have to do the same at some point with Alpha to get the volumes up.
                       
    	Steve