Conference 7.286::digital

   Worldwide News                                                  LIVE WIRE
 =============================================================================
 Digital says fourth quarter results will be below expectations  : 02-Jul-1996
 =============================================================================

       Digital says fourth quarter results will be below expectation
   
         Digital today said despite continued strong growth in its 64-bit 
   Alpha products and services, fourth quarter results will be well below 
   its expectations.
         In addition, the company said that it will take a restructuring 
   charge of approximately $475 million against its fourth quarter 
   earnings for actions directed toward further improving the company's 
   financial performance and strengthening its foundation for future 
   growth. The company's fourth quarter, which ended June 29, and full 
   year results will be reported July 30.
         "Although we have made significant progress, particularly with 
   respect to establishing a long-term strategy, we obviously are not 
   satisfied with the current business financial results," said Digital 
   Chairman Robert B. Palmer.  "The financial performance of our personal 
   computer business is unacceptable.  In addition, we are experiencing a 
   significant slowdown in several European markets."
         Vincent J. Mullarkey, vice president and chief financial officer, 
   said the company expects fourth quarter profits to be significantly 
   below current estimates with revenue lower than the same period last 
   year.
         "We understand our business problems," Mullarkey said.  "Our 
   management team is taking the steps necessary to address those 
   problems.
         "Over the past months, we reduced PC desktop inventory in the 
   channels and reduced costs.  At the same time, we have begun to 
   implement our Windows NT, client/server commercial strategy," he 
   continued.  "We are making progress, but not yet at the levels 
   originally anticipated.  In addition, we are experiencing the impact of 
   unusually aggressive industry pricing pressures."
         Digital indicated the restructuring charge will cover the costs 
   associated with the elimination of approximately 7,000 positions 
   worldwide over the next 12 months and related facility consolidations.
         "This additional restructuring enables the company to move to the 
   next level of efficiency and lower cost structure necessary to attain 
   competitive financial performance," said Palmer.  "We also are 
   addressing those areas which have negatively affected our financial 
   performance to ensure that we meet our strategic objectives."
         Palmer said while the company faces some significant short-term 
   business issues, its 64-bit Alpha-based systems and services are 
   showing impressive growth.
         He said the $500 million contract announced June 25 with Citibank 
   is proof of Digital's growing strength in the service area. The 
   company's strategic alliances with Microsoft, Oracle, MCI and Computer 
   Associates, together with the semiconductor alliances with Samsung 
   Electronics and Mitsubishi Electric, are demonstrations of the 
   company's success in executing its strategy, he said.
         "Digital clearly is well-positioned for continued growth in our 
   strategic products and services portfolio," Palmer added.  "We are 
   confident that we will be back on track and showing significant 
   financial improvement by the end of the calendar year.  We also are 
   confident that the financial performance of the company will be among 
   industry leaders within two years."  

    "Although we have made significant progress, particularly with
    respect to establishing a long-term strategy"
    
    Sounds like strategy development is one of our bright spots 8^)
    
    Mark
    

    DEC
    USA - New York
    
    Update Date/Time	15 MIN. DELAY
    Last	41 7/8	Change	  -4
    Currency	USD	% Change  -8.72% 
    Day Low  	41 5/8	Day High  42 1/8
    Previous	45 7/8	Volume	  5,500
    
    

    re:
    Sounds like strategy development is one of our bright spots
    
    core value...

    it's already $5 down...   :-(

Digital Equipment Corp. Ratings Affirmed By S&P


         S&P announced today it has affirmed its BB+ senior debt and BB-
preferred stock ratings of Digital Equipment Corp. 

         The corporate credit rating is BB+.  The rating outlook is
stable.  The total debt rated (including preferred stock) is about $1.5
billion. 

         S&P said the ratings affirmation follows "the announced $475
million, mostly cash, restructuring charge in its fiscal fourth quarter
and a weaker near-term earnings outlook reflecting its underperforming
personal computer division and a difficult European marketplace." 

         Commenting on the outlook, S&P said it reflects "current
confidence in management's implementation of its business strategies
over the longer term. However, the outlook recognizes that this is a
transitional period as the company continues to implement its strategies
and that the progress may not necessarily be linear. The company's
balance sheet provides the liquidity to sustain it during this period.
DEC has recorded six quarters of profit following a sustained period of
losses." 

         In evaluating the assigned ratings, S&P included the following
statement: "DEC's ratings reflect the continuing progress the company is
making in executing its restructuring plan, its adequate liquidity, and
Standard & Poor's expectation that DEC can improve upon recent
performance trends over the long term. Much of the earnings progress to-
date has been driven by cost restructuring efforts. The performance of
certain business areas, while improving, underperform the levels of
leading competitors. While the difficult transition of its installed
customer base from proprietary VAX systems to Alpha-based products is
mostly behind them, DEC will continually be challenged to grow its
revenue and volume base, attract new customers, improve its marketing
and distribution organizations, and align its cost structure to reflect
the increasing importance of faster growing but lower margin
businesses." 

         However, S&P noted that third quarter earnings were
"encouraging" and that the company "grew its revenue base on an adjusted
basis despite the turmoil surrounding its restructuring efforts,
generated positive cash flow from operations, and was profitable.
Additionally, gross margin has stabilized in the low-30% area, coupled
with a substantial decline in sales, general and administrative
expenses. Recently announced strategic alliances with Microsoft Corp.,
Oracle Corp., and Computer Associates could provide meaningful revenue
opportunities over time, while the prospect for a shared semiconductor
facility could translate into significant savings for this currently
unprofitable but key unit." 


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  (END) FEDERAL FILINGS-DOW JONES NEWS 07-02-96

  11:19

07/02/96 11:19
:TICKER: DEC
:SUBJECT: LCIN SRTG MA COMP
Copyright (c) 1996 Federal Filings, Inc. - A Dow Jones Information Services Co.
Received by NewsEDGE/LAN: 7/2/96 11:23 AM



    

    My concern over this is with customer reaction; I've seen it already today. 
    
    I've been at two customer sites today, both of which expressed concern
    over customer support with more cuts looming - and wondering whether
    they have to go back to the fears of a few years ago - will Digital
    survive?  And if they are wondering about these kinds of issues, why
    should they commit to us?  These are pro-Digital customers who are
    desparate to see that we have some kind of strategy for survival and
    *growth*.
    
    How can I answer these kinds of questions?  
             

    Find another job and resign.  The customer will figure it out.

    .9
    It's flippant answers like yours which do NOTHING to alleviate that
    valid customer/partner concerns out there about Digital, its future
    viable as a corporation, and a reason why a customer should continue to
    WANT to do business with Digital.
    
    The question in .8 was serious and deserves a serious answer.  This
    forum isn't SOAPBOX, so save it!

    We're (in)famous!
    
    As I'm sitting here watching the ABC Nightly News, I hear the word
    "Digital". I look up to see a story on Digital's 7000 job layoff. Slow PC
    sales took the blame.                                                  

    re .9
    
    How about the truth??!!
    
    Every time this happens, our management seems to go missing - IMHO, we
    should be out there telling the base the real story, along with S&P
    saying we're still ok, before the likes of HP, IBM, SGI et al have us
    for lunch.
    
    I don't think .9 was that flippant anyway - we've all (no matter wher
    we work) had a spleen full of getting hosed when we're out on site.
    
    Having said that - what is to become of the PCBU, where the blame seems
    to be placed.
    
    Wicko
    
     

    re .13
    
     >what is to become of the PCBU
    
    He is oiling up the chainsaw again. 

    Greetings all,
    
    My first reaction to .9 was... right on! I've had several customers
    already ask me how long before DEC would realize there is a world
    outside Maynard. 
    
    Fred

    re: .12
    
    Worse than making the nightly snooze did you notice that nice blue
    colored logo they used?

    The pcbu ..... err, where the heck are the *7000* gonna come from...
    That is a big number..... need to sell off something to get there I'll
    betcha!
                                                             

    re:.11
    
    I think it's FLIPPANT answers that help us deal with the
    NON-INFORMATION that this company seems to feed us. Instead of JUMPING
    on this and anticipating these types of questions with some anwers, we
    HIDE our heads in the sand, and let it be every man for himself. 
    
    And yes I can SOAPBOX if I want, just like you can hit return or KP2
    for next topic.
    
    Joe

� I've had several customers already ask me how long before DEC would realize
� there is a world outside Maynard.

What do they mean by that?  If they're referring to the arrogance that crept
into parts of Digital in the late 1980s, I haven't seen much of that lately.

Paul

Paul,

> What do they mean by that?  If they're referring to the arrogance that crept
> into parts of Digital in the late 1980s, I haven't seen much of that lately.

I think they mean our business practices.  We are so far from being customer
focused that it isn't funny.  Our business processes in the field need a
complete overhaul.  We let our internal idiosyncrasies be clearly visible
to our customers.  We are the probably the most difficult high-tech company
to do business with.

I service a customer who has all over the facilities signs such as
	We will not let our internal problems inconvenience our customer
	in any way.
And they work at it.

I wish we would.

Ram

    re .20 like letting the Business Partner's purchase any system and use
    the printer of their choice to product the license for the operating
    system software.  Instead we require them to purchase each system with
    a designated os.  If the customer wants to change os for that system -
    let just make it difficult by inundating them with paperwork.
    
    For example, I have the following:
    	2100 with NT
    	2100 with UNIX
    	2100 with OpenVMS
    
    How many system boxes do I have?  To the Business Partner'S ONE.  To 
    digital THREE.  By the way the customer is always right - it's THREE.

    
    
    In my current role as Service Event Quality Manager, I have 
    dealt with nearly every aspect of "service delivery" and "customer
    satisfaction".  To say that Digital is "difficult" to do business with is 
    an understatement.  I see the results of our surveys and can't
    help but wonder how high on the managerial ladder one has to climb 
    before completely losing sight of the customer.  We talk customer
    satisfaction but it sure seems to me there are a lot of folks at the
    top rung who haven't got a clue.   
    
    Over the last year I've listened to customers complain about our
    cutting our workforce but not our prices.  I've spoken to frustrated 
    resellers who cannot deal with our business practices.  Some would opt to 
    offer their customers reduced-performance alternatives to avoid dealing 
    with Digital.  Ironically, a lot of the channel partners were former sales 
    associates who claim they never realized we were this difficult to do 
    business with.  We sell high powered departmental servers,  yet wait till 
    a call is logged to tell the customer that the 3 yr, onsite warranty 
    comes with a next day response.  Customer sat?  
    
    I hear talk about cohesion between business units but am
    told not to support a sales effort without first ensuring there is
    internal payment authorization.  At the same time, we routinely give 
    away service to any customer who is savy enough to dispute the accuracy 
    of our databases.
    
    And then, there are the Change Forums.  
    
    I suppose the toughest thing I've had to deal with is the personnel
    losses.  Not that we didn't need a little liposuction, but with the fat
    went a lot of muscle.  I've watched talented friends walk out the
    door knowing that the company made no effort to hold onto them and had
    no intention of filling the technical void.  Invariably, I'd celebrate 
    with them on Friday night and receive a call, requiring their
    expertise, the following Monday.
    
    Anyway, thats my 10 cents(factoring in inflation).  I realize comments 
    in a notes conference will do nothing to fix the problems facing Digital.  
    But it's good to have a place to dump at 2:00 in the morning.
    
    ws

    .22 u r right on in your assessments...especially about how difficult
    we are to do business with...

        I've been with Digital for 17 years and always been proud of
        Digital. That's very important to me since I'm doing lots of
	customer presentations. Have to be positive and enthousiastic.

        After the difficult years when we lost a lot of good people I could
	see that we were slightly below critical mass here and there, but
	with the last coulpe of quarters' profit it started to look good
	again. I believed in a profitable future. Moral++;

	And now this.

	In one of the recent announcements I saw the following:

        "This additional restructuring enables the company to move to
         the next level of efficiency  ... "

	I believe it.

	I honestly wish I could find something positive to say, but I can't.

	On Friday I'll be standing in front of important customers and
	talk about systems and O/S. Suppose they ask me:

	"We hear about your latest restructuring. How do you plan to
	 maintain expertise for consulting and support with a smaller and
	 smaller workforce?"

	Of course I have the answer ready:

	"We'll move to the next level of efficiency!"

/�ke

    In teh WSJ today
    
    The layoffs were characterized by Digital executives:
    
    "Strengthen its foundation for future growth"
    
    "A tuning excercise rather than an emergency measure"
    
    Printers, PCs and memory chip businesses losing money
    
    "We don't have the sales coverage quite right"
    
    "We unfortunately dropped a few important customers through
    the cracks"
    
    "The company will be back on track by the quarter ending December 1996"
    
    After just finished reading "The Dibert Priciple" I'm having deja vu
    all over again 8^)
    
    Mark
    

    re .25:
    
    >After just finished reading "The Dibert Priciple" I'm having deja vu
    >all over again 8^)
    
    Sometimes I can't avoid the impression it's the only management
    handbook our executives have ever read...
    
    ----------
    
    Mgr: "Our research has shown that employees aren't our most important
    resource after all. They came in 9th."
    
    "I'm afraid to ask what was no. 8?"
    
    Mgr:  "Carbon paper."
    
    ---
    
    [This is from meory, but you get the idea...]

RE: 4690.24, �ke

	Yes, this "next level" is an ongoing pain ;-)
	

/britt

[Posted by WWW Notes gateway]

    
    I got the Q&A package and found the following response hard to
    understand? 
    
    18. Q:  IF YOU CUT 7,000 JOBS, WON'T THAT AFFECT SERVICES?
    
        A:  No.  We are making changes to enhance our ability to serve our
            customers.
    

    what q & a package is .29 referring to?
    
    can someone post it here?
    
    Randy
    

    Regarding the DVN to be broadcast at 11:30 am EST, there will be
    NO broadcast in SHR. I don't know if I'm the last one to find out,
    but the satelite dish is broken, so no broadcast.
    
    Of course, it's too late now, if anyone had wanted to drive over
    to MRO, to see it.  It would have been nice to at least have had 
    that option.
    
    Sue

    
    
    
    You didn't miss much.
    
    

In fact, you didn't miss anything.  Null semantic content, other than the
laugh a slide bullet saying "selected management changes" got at ZKO.  No
change in strategy - just keep on slashing.  (Having been playing with the
new CD-ROM "Monty Python's Search for the Holy Grail", I find the current
situation eerily reminiscent of Arthur's battle with the Black Knight - where
Arthur keeps cutting off the knight's arms and legs, but the knight insists
"it's only a flesh wound".

					Steve

    none in Jessup, either

    In the press release it was mentioned that our problems are due to
    PCBU, Memory business and Printers. I think it is easy for any analyst
    to quickly figure out the issues quickly. All they have to do is to
    find out is what is size of the memory business and printer business. 
    - Yes! we donot publish that information in the balance sheet ( HP and few
    others do and they can guess.
    
    For example the OEM Memory business until July 1995 was nothing but a 
    one man show! He generated 100+ millions in business and things were 
    looking good, when the memory prices were high. This group swelled to 
    15 people and about 8 sales person in FY96 and when the memory prices 
    went down this group took the hit and I guess we are now out of OEM
    memory business and most of the people in this group has moved on to
    other things. 
    
    What was our printer business revenue. perhaps say 200 Million ? What
    is the profit magin here ? Well ! You get the picture.
    
    Based on the analysis I did for a finance class project, I am convinced
    that our problem is not S&GA or R&D. Our problem is COGS ( Cost of
    Goods sold ) which has gone up from 60.6% to 68% in past 3 years. ( See
    Note 4673.51. This mostly consists of cost of goods, manufacturing , M&L 
    etc etc. I think one needs to carefully look at this area for improving 
    efficiency. 
    
    Jay
     
   
    

>>>the laugh a slide bullet saying "selected management changes" got at ZKO.
    
    REO (Reading, UK) got the same laugh!! At least things are working to 
    pull us together!
    
    Cheers, Chris
    

Transcript of Bob Palmer's July 3 DVN message to employees (03-Jul)

.38 hidden because it was the contents of a memo classified DIGITAL
CONFIDENTIAL.

				Steve

    That means that the WSJ and NY Times have a copy and we will have to
    wait to read it there !

    
    1996 Q2 Results
    HP NET EARNINGS UP 25 PERCENT IN SECOND QUARTER
    Net Revenue Increases 33 Percent, Orders Rise 24 Percent
    
    
    PALO ALTO, Calif., May 16, 1996 -- Hewlett-Packard Company (NYSE: HWP)
    today reported a 25 percent increase in net earnings for the 1996
    fiscal year's second quarter, which ended April 30. Net revenue grew 33
    percent, and orders rose 24 percent over the year-ago quarter. 
    
    Net earnings for the quarter were $723 million, or $1.37 per share on
    approximately 528 million shares of common stock and common-stock
    equivalents. This compares with earnings of $1.10 per share on
    approximately 526 million shares in the same quarter last year. 
    
    Net revenue for the quarter was $9.9 billion, compared with $7.4
    billion in the year-ago quarter. Net revenue in the United States was
    $4.4 billion, an increase of 39 percent compared with the second
    quarter last year, while net revenue from outside the United States
    increased 28 percent to $5.5 billion. 
    
    Orders for the quarter totaled $10.1 billion, compared with $8.1
    billion in the second quarter of 1995. U.S. orders increased 33 percent
    to $4.7 billion, while orders from outside the United States grew 18
    percent to $5.4 billion. 
    
    "Our results were excellent in many respects this quarter," said Lewis
    E. Platt, HP chairman, president and chief executive officer. "We
    achieved strong overall order and revenue growth in very competitive
    markets. This growth was driven once again by excellent acceptance of
    new products and services. Our earnings growth was very good, but we
    didn't quite match last quarter's high level of profitability. 
    
    "We're extremely pleased with the continued strength of our computer
    business, where orders totaled $8.4 billion, an increase of 29 percent
    over the year-ago period. This result translated into excellent
    profitability, but weakness in two computer products affected our
    earnings growth." 
    
    Order Summary
    
    Within the computer business, PCs grew very rapidly this quarter and
    continued to gain market share. Orders for PC servers posted an
    outstanding increase over the year-ago quarter. Demand for the HP
    Vectra family of desktop PCs was very strong, and orders for the HP
    Pavilion line of multimedia home PCs were extremely strong as well. 
    
    Both the inkjet and the laser printer families registered vigorous
    order growth and achieved gains in market share. 
    
    In the inkjet-products business, demand for the HP DeskJet 855 business
    printer and the recently introduced HP DeskJet 820C
    small-office/home-office printers was superb. Inkjet supplies posted
    outstanding growth. Orders for the new HP OfficeJet 350
    printer/fax/copier were excellent. 
    
    In the laser-printer business, strong acceptance of the new HP LaserJet
    5 printer, HP Color LaserJet printer and HP ScanJet 4p scanner, as well
    as continued strength in LaserJet printer supplies, drove growth. 
    
    Demand for HP's UNIX(R) system servers continued very strong,
    especially in the telecommunications, financial-services and
    manufacturing industries. Orders for enterprise software products, such
    as HP OpenView and HP OpenMail, also continued to grow. In the service
    and support business, demand for professional services, especially
    consulting, was excellent. The disk-drive business was weak, and demand
    for workstations declined in anticipation of June product
    introductions. 
    
    The test-and-measurement business posted 10 percent order growth
    compared with a very healthy year-ago quarter. Demand was strong for
    communications-network monitoring systems, spectrum-monitoring systems,
    digital-integrated-circuit (IC) test, and support and professional
    services. Sequentially, orders were somewhat weaker because of slowing
    demand in a few areas, such as telecommunications and semiconductor
    manufacturing. 
    
    In the medical-products business, orders grew 6 percent over the
    year-ago quarter, led by demand for imaging systems and customer
    services. 
    
    Orders for components declined 16 percent, as customers moved to reduce
    their inventories. However, demand for infrared components grew very
    strongly, and order growth in fiber-optic components was very good. 
    
    Orders for chemical-analysis products increased 9 percent compared with
    last year. Liquid chromatography products posted outstanding order
    growth. 
    
    Costs and Expenses
    
    Cost of goods sold for the quarter was 65.8 percent of net revenue,
    compared with 62.7 percent in the year-ago quarter and 64.5 percent in
    the first quarter of fiscal 1996. 
    
    Several factors contributed to this increase, including the negative
    effects of product delays in workstations and disk mechanisms, a
    greater proportion of PCs and printers in the company's revenue mix and
    competitive pricing pressures. 
    
    Operating expenses increased 23 percent over the year-ago quarter and
    were 23.7 percent of net revenue. This compares with 25.6 percent of
    net revenue in the same quarter last year and 22.6 percent in the first
    quarter of fiscal 1996. Recent acquisitions of Convex Computer Corp.
    and certain of the assets of SecureWare Inc. contributed to this
    quarter's growth in operating expenses. 
    
    
    
    
    
    
    
    "We improved our operating-expense ratio compared with last year, but
    we didn't do as well as we had hoped," said Platt. "We've said in
    recent quarters that we would be adding resources to support our strong
    growth. We continue to work on striking a balance between investing in
    high-growth opportunities and reducing operating-expense ratios." 
    
    
    
    
    
    
    
    Asset Management
    
    As a percentage of net revenue, accounts receivable was 19.5 percent,
    compared with 19.6 percent in the year-ago quarter and with 19.3
    percent in the first quarter. Net property, plant and equipment was
    14.0 percent of net revenue, compared with 15.9 percent a year ago and
    14.3 percent in the first quarter of this year. Inventory was 18.7
    percent of net revenue, compared with 16.6 percent in last year's
    second quarter and 20.3 percent in the first quarter of fiscal 1996. 
    
    
    
    
    
    
    
    "We're quite pleased with the company's return on assets of 10.3
    percent this quarter," said Platt. "Accounts receivable tracked revenue
    growth closely, and we continued to make progress on reducing property,
    plant and equipment as a percent of revenue, while adding needed
    capacity. 
    
    
    
    
    
    
    
    "Inventory declined slightly during the quarter," said Platt. "But
    inventory still is higher than we want it to be in some areas. We're
    continuing to emphasize the need to find the right inventory levels for
    different businesses." 
    
    
    
    
    
    
    
    Six-month Review
    
    For the six months ended April 30, net earnings rose 28 percent to $1.5
    billion, compared with $1.2 billion in the first half of 1995. Net
    earnings per share was $2.87, a 28 percent increase over the $2.25 the
    company earned in last year's first half. 
    
    
    
    
    
    
    
    Net revenue rose 30 percent over the first half of last year to $19.2
    billion. Net revenue in the United States was $8.1 billion, an increase
    of 30 percent over the year-ago half, while net revenue from outside
    the United States increased 31 percent to $11.0 billion. 
    
    
    
    
    
    
    
    Orders for the six-month period totaled $20.2 billion, a 27 percent
    increase over the same period last year. U.S. orders were $8.6 billion,
    an increase of 28 percent, while orders from outside the United States
    were $11.6 billion, up 25 percent compared with the first half of 1995. 
    
    
    
    
    
    
    
    Business Outlook
    
    "We're encouraged by this quarter's excellent order and revenue
    increases," said Platt. "We believe our growth rates in many parts of
    the company are outpacing overall market growth, despite intense
    competition. 
    
    
    
    
    
    
    
    "But our order growth was not as well-balanced across the company as it
    has been, and we need to focus on those areas where growth has been
    sluggish," Platt added. "In addition, we have to continue to address
    operating-expense growth in those parts of the company where pressure
    on gross margins is significant. This is an important priority because,
    while this quarter's increase in cost of sales was unusually sharp, we
    expect the underlying upward pressures on these costs to continue. 
    
    
    
    
    
    
    
    "We're going to stay focused on the fundamentals: innovative products
    and solutions, compelling price/performance and strong distribution,"
    said Platt. "We have some excellent new products on the horizon, and
    it's important that we manage key product transitions well. At the same
    time, we're going to be very active in our efforts to improve our
    expense and asset structures and to capitalize on our strong position
    in the markets we serve." 
    
    
    
    
    
    
    
    Hewlett-Packard Company is a leading global manufacturer of computing,
    communications and measurement products and services recognized for
    excellence in quality and support. HP has 108,300 employees and had
    revenue of $31.5 billion in its 1995 fiscal year. 
    
    
    
    
    
    
    
    Current and historical financial information now is available at HP's
    Financial Online site on the World Wide Web. Address:
    http://www.hp.com/go/financials 
    
    
    
    
    
    
    
    In FY96, the company changed its order-reporting policies for its
    support businesses. Orders now are reported as they are received rather
    than when services are provided. FY95 orders have been restated to
    reflect this change, which did not have a material impact on order
    growth rates. 
    
    
    
    
    
    
    
    UNIX is a registered trademark in the United States and other
    countries, licensed exclusively through X/Open(tm) Company Limited. 
    
    
    
    
    
    
    
    X/Open is a trademark of X/Open Company Limited in the UK and other
    countries. 
    
    
    
    
    
    
    
    
    
    
    
    
    
    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
    
    CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
    
    (Unaudited)
    
    
    
    
    
     
    
                                        Three months          Percent
    
    (In millions except                ended April 30        increase
    
      per share amounts)               1996       1995               
    
                                     ------     ------       --------
    
    Net revenue: 
    
      Products                       $8,582     $6,339
    
      Services                        1,298      1,089
    
                                     ------     ------
    
              Total                   9,880      7,428          33
    
    
    
    Costs and expenses:
    
      Cost of products sold
    
        and services                  6,498      4,654
    
      Research and development          691        556
    
      Selling, general and 
    
        administrative                1,650      1,343
    
                                     ------     ------
    
              Total                   8,839      6,553          35
    
    
    
    Earnings from operations          1,041        875          19
    
    
    
    Interest income and other, net       62         26
    
    Interest expense                     73         47
    
                                     ------     ------
    
    Earnings before taxes             1,030        854          21
    
    
    
    Provision for taxes                 307        277        
    
                                     ------     ------
    
    Net earnings                     $  723     $  577          25
    
                                     ======     ======
    
    
    
    Net earnings per share           $ 1.37     $ 1.10          25
    
                                     ======     ======
    
    
    
    Average shares and equivalents  
    
      used in computing net 
    
      earnings per share                528        526
    
                                     ======     ======      
    
    Orders:                          
    
      United States (A)             $ 4,672     $3,523          33
    
      International (A)               5,438      4,609          18
    
                                	-------     ------
    
              Total                 $10,110     $8,132          24
    
                                    =======     ====== 
    
    
    
    
    
    
    
    
    
    (A) In fiscal 1996, the company changed its order-reporting policies
    for its support businesses to report orders when received instead of as
    services are provided. Fiscal 1995 orders have been restated to reflect
    this change, which did not have a material impact on order growth
    rates. 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
    
    CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
    
    (Unaudited)
    
    
    
    
    
    
    
                                          Six months           Percent
    
    (In millions except                 ended April 30        increase
    
      per share amounts)               1996       1995               
    
                                     ------     ------        --------               
    
    Net revenue:                       
    
      Products                      $16,622    $12,624
    
      Services                        2,546      2,108
    
                                    -------    ------- 
    
              Total                  19,168     14,732          30
    
    
    
    Costs and expenses:
    
      Cost of products sold
    
        and services                 12,486      9,201
    
      Research and development        1,303      1,091
    
      Selling, general and 
    
        administrative                3,143      2,633
    
                                    -------    ------- 
    
              Total                  16,932     12,925          31
    
    
    
    Earnings from operations          2,236      1,807          24
    
    
    
    Interest income and other, net       99         59
    
    Interest expense                    143         93 
    
                                    -------    ------- 
    
    Earnings before taxes             2,192      1,773          24
    
    
    
    Provision for taxes                 679        594
    
                                    -------    -------
    
    Net earnings                    $ 1,513    $ 1,179          28
    
                                    =======    =======
    
    
    
    Net earnings per share          $  2.87    $  2.25          28
    
                                    =======    =======
    
    
    
    Average shares and equivalents
    
      used in computing net 
    
      earnings per share                527        525
    
                                    =======    =======
    
    Orders:                          
    
      United States (A)             $ 8,595    $ 6,690          28
    
      International (A)              11,617      9,277          25
    
                                    -------    ------- 
    
              Total                 $20,212    $15,967          27
    
                                    =======    =======
    
    
    
    
    
    
    
    
    
    (A) In fiscal 1996, the company changed its order-reporting policies
    for its support businesses to report orders when received instead of as
    services are provided. Fiscal 1995 orders have been restated to reflect
    this change, which did not have a material impact on order growth
    rates. 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hewlett-Packard Company, operating in a single industry segment,
    designs, manufactures and services products and systems for
    measurement, computation and communications. The table below provides
    supplemental information showing orders and net revenue by groupings of
    similar products and services. 
    
    
    
    
    
    
    
    
    
    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
    
    Orders and Net Revenue by Groupings
    
    of Similar Products and Services
    
    (Unaudited)
    
    
    
    
    
    
    
    (In millions)
    
                                                    Three months       Six
    months 
    
    For the periods ended April 30                 1996     1995     1996    
    1995
    
                                                -------  -------  ------- 
    -------							                                                     
    
    ORDERS (A)
    
    
    
    Computer products, service and support      $ 8,373   $6,476  $16,624 
    $12,737
    
    
    
    Electronic test and measurement       
    
      instrumentation, systems and service          939      853    1,968   
    1,635 
    
    
    
    Medical electronic equipment and service        347      327      665     
    653
    
    
    
    Chemical analysis and service                   223      204      441     
    410
    
    
    
    Electronic components                           228      272      514     
    532
    
                                                -------  -------  ------- 
    -------
    
                   Total                        $10,110   $8,132  $20,212 
    $15,967
    
                                                =======  =======  ======= 
    ======= 
    
    NET REVENUE
    
    
    
    Computer products, service and support      $ 8,039   $5,879  $15,689 
    $11,763
    
     
    
    Electronic test and measurement       
    
      instrumentation, systems and service        1,017      835    1,903   
    1,564 
    
    
    
    Medical electronic equipment and service        373      328      695     
    634
    
    
    
    Chemical analysis and service                   214      193      420     
    380
    
    
    
    Electronic components                           237      193      461     
    391
    
                                                -------  -------  ------- 
    -------
    
                   Total                        $ 9,880   $7,428  $19,168 
    $14,732
    
                                                =======  =======  ======= 
    =======
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (A) In fiscal 1996, the company changed its order-reporting policies
    for its support businesses to report orders when received instead of as
    services are provided. Fiscal 1995 orders have been restated to reflect
    this change, which did not have a material impact on order growth
    rates. 
    
    
    
    
    
    
    
    
    
    
    
    
    
    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
    
    CONSOLIDATED CONDENSED BALANCE SHEET
    
    
    
    
    
    
    
    
    
    (In millions except par value)  
    
                
    
                   ASSETS              
    
                                                April 30     Oct. 31
    
                                                    1996        1995                      
    
                                             (Unaudited)
    
                                             -----------     -------								 
    
    Current assets:
    
      Cash and cash equivalents                  $ 1,901     $ 1,973
    
      Short-term investments                       1,387         643
    
      Accounts and notes receivable                7,025       6,735
    
      Inventories                                  6,735       6,013
    
      Other current assets                         1,056         875
    
                                                 -------     -------
    
        Total current assets                      18,104      16,239
    
                                                 -------     -------
    
    
    
    Property, plant and equipment, net             5,017       4,711
    
    
    
    Long-term investments and other assets         3,797       3,477
    
                                                 -------     -------
    
                                                 $26,918     $24,427
    
                                                 =======     =======
    
    
    
        LIABILITIES AND SHAREHOLDERS' EQUITY
    
    
    
    Current liabilities:
    
      Notes payable and short-term borrowings    $ 3,500     $ 3,214
    
      Accounts payable                             2,181       2,422
    
      Employee compensation and benefits           1,750       1,568
    
      Taxes on earnings                            1,543       1,494            
    
      Deferred revenues                              961         782           
    
      Other accrued liabilities                    1,776       1,464
    
                                                 -------     -------
    
        Total current liabilities                 11,711      10,944
    
                                                 -------     -------
    
    
    
    Long-term debt                                 1,193         663
    
                                                 -------     -------
    
    Other liabilities                              1,012         981
    
                                                 -------     -------
    
    Shareholders' equity:
    
      Common stock and capital in excess
    
        of $1 par value                              888         871
    
      Retained earnings                           12,114      10,968
    
                                                 -------     -------
    
        Total shareholders' equity                13,002      11,839
    
                                                 -------     -------
    
                                                 $26,918     $24,427
    
                                                 =======     =======
    
    
    
    
    
                                         #  #  #

    
    Well if we made cars, we would be named
    
    Studebaker Inc.
    
    

    .42
    I wouldn't doubt HP made money on PC's due to their phenomenal
    success in PC servers, probably due to rewarding their sales
    force to sell them.  What a concept, huh?

    The upcoming layoff of 7000 people is not our biggest problem.
    
    The north-east is no longer in recession; there's no shortage
    of places for people to go. It's not like a few years ago when
    Digital/HP-Apollo/Wang/DG/Everyone were laying off.
    
    As we've noticed in the last several months, we have a bigger
    problem keeping the remaining people. Good people get fed up
    with the depressing atmosphere, and the death-of-a-thousand-cuts
    we've been going through.
    
    This latest round of cuts and layoffs could be the straw that
    breaks the camel's back for a lot of people.
    

    
    	RE: .40
    
    	OK, what am I missing here?
    
    	Aren't all NOTES conferences labelled DIGITAL CONFIDENTIAL, and
    	therefore all entries submitted would have to be set /hidden?
    

    RE: Well if we made cars, we would be named Studebaker Inc.
    
    As they spun off their divisions and moved the vehicle operations to
    Canada, they found that in the new core businesses they could be very
    successful. Unfortunately, they were no longer in the vehicle business.
    Remember they started making wagons and there was a lot of resistance
    to the internal combustion engine by both the product designers and the
    customers.
    
    Some divisions survive today and are very heathly for those that
    invested when the stock was low.
    
    Howard
    
    BTW- It is easier and less expensive and faster to buy NOS parts for my
    64 Stude than any of my other vehicles!

    What you're missing (assuming .46 was a serious question) is
    twofold: 
    
    -- Notes conferences are generally considered to be "Digital
       Internal Use Only". Digital Confidential is a more restrictive
       designation.
    
    -- Even documents labeled "Digital Internal Use Only" should not
       be posted in unrestricted conferences without really good
       reason.
    
    -- The document that I saw that was hidden was exerpted from a
       mail message; the mail was not directed to "world", and there
       was no permission indicated for public posting. The mail headers
       were not even included in the posting. (I obviously don't know
       for a fact that the posting came from the same mail message, but
       as it was the same text, it seems likely.)
    

    
    	The memo was labelled [paraphrased], "please share with your
    	employees".
    

    
    <---- get back to work, you slacker.

    It carried a *warning* that it was a Digital Confidential document
    and a request that managers meet with their employees to discuss it.
    It was clearly not intended for public display. In any event,
    exerpting a portion of a labeled Digital Confidential document,
    leaving off the warnings and headers, and posting it in a notes
    conferences violates more corporate rules than you can shake a stick
    at (well, at least one or two).

    
    	Do people really spend time shaking sticks at things like
    	that?  Seems so counterproductive, to say the least.
    

Having not seen a copy of the memo, I can't comment other than to say if
it was labelled "DIGITAL CONFIDENTIAL" (or some approximate variant thereof),
the default is that it may not be posted in an unrestricted notesfile.
The author may be approached with a request to reissue the memo with a
more appropriate classification, if necessary.

Please see note 1.17 for further information.

				Steve

From the Proprietary Information Protection Guide

DIGITAL CONFIDENTIAL

"Reproduction authorized with the permission of the 
originator/custodian."

"Limited distribution based on absolute "need-to-know"."

    What is an "unprotected notesfile"... should I be practicing safe
    notesfile?

    
    .47
    interesting info on Studebaker.
    the History channel devoted an hour to the company in their
    series on autos.
    
    they showed one of the last BOD meetings, with the new CEO 
    announcing how their latest reorg was going to save the company.
    (Interesting to note, everybody was smoking a cigarette).
    
    How they had great cars, ahead of their time in design.But
    couldn't market or sell enough of them.  
    
    They also, ran an hour on the Avanti (the car that wouldn't
    die).But did in 1991 or so.
    
    

Re: .55

The more appropriate term would be "unrestricted notesfile" - one that does
not require being a member to gain access.

				Steve

    Why do you people go on about a Confidential Memo from management. 
    Anyone with any sense can guess what it's contents are. "We had to make
    some adjustments blah,blah blah..." It's probably a reprint from 
    one of last dozen or so times we had an "incident" like this. 
    
    What  we need is a threat from another planet kind of like ID4 to
    really get the military buying computers again ! 

                             A Grim Fairy Tale
                             -----------------
                             
Once upon a time, an American automobile company and a Japanese auto 
company decided to have a competitive boat race on the Detroit River.  
Both teams practiced hard and long to reach their peak performance.  On 
the big day, they were as ready as they could be.  
 
The Japanese team won by a mile.
 
Afterwards, the American team became discouraged by the loss and their 
moral sagged.  Corporate management decided that the reason for the 
crushing defeat had to be found.  A Continuous Measurable Improvement 
Team of "Executives" was set up to investigate the problem and to 
recommend appropriate corrective action.  
 
Their conclusion:  The problem was that the Japanese team had 8 people 
rowing and 1 person steering, whereas the American team had 1 person 
rowing and 8 people steering.  The American Corporate Steering Committee 
immediately hired a consulting firm to do a study on the management 
structure.
 
After some time and billions of dollars, the consulting firm concluded 
that "too many people were steering and not enough rowing."  To prevent 
losing to the Japanese again next year, the management structure was 
changed to "4 Steering Managers, 3 Area Steering Managers, and 1 Staff 
Steering Manager" and a new performance system for the person rowing the 
boat to give more incentive to work harder and become a six sigma 
performer.  "We must give him empowerment and enrichment."  That ought 
to do it.
 
The next year the Japanese team won by two miles.
 
The American Corporation laid off the rower for poor performance, sold 
all of the paddles, cancelled all capital investments for new equipment, 
halted development of a new canoe, awarded high performance awards to 
the consulting firm, and distributed the money saved as bonuses to the 
senior executives.
 

    

     I have re-looked at my .38 posting, now hidden, and can not 
    see 'Digital Confidential' anywhere, I am therefore reposting 
    the reply but this time in its entirety. The Q&A is after the part 
    already posted in this topic.

    I have XXXX'x out the sender name thats all.

    Please note that the following is for your information :-)
    
    
    Mark.
                       -----------------------------

From:	XXXXXX::XXX "02-Jul-1996 1450 +0100"  2-JUL-1996 14:52:25.97
To:	ULYSSE::BUXTON_M
CC:	
Subj:	UI: 7000 suppressions et resultats 96 


	*****************************************************************
	*	MESSAGE aux Membres et Sympathisants			*
	*	Section Syndicale CFDT de DECTE				*
	*								*
	*	THIS MESSAGE COMES TO YOU BY COURTESY OF		*
	*	THE TU-SECTION CFDT DECTE				*
	*	FOR MEMBERS AND SYMPATHIZERS				*
	*****************************************************************

	Bonjour les collegues..

		L'ETE CHAUD COMMENCENT A SE PRECISER....!! si vous etes
	pas deja au courant ...annonce de 7000 suppressions d'emploi 
	ci-joint..!! Plus un Q/A sur les resultats...et surtout comment
	les salaries aux USA sont remercies...( 4 full weeks severance pay ) !!
	Tous ca va cerement remonte le cour des actions sur Wall Street !!

	Par contre NOUS, nous devons nous tenir pret a defendre notre 
	bifteck...

	a plus

 	xxx.


Subj:	FWD: annonce de 7000 suppressions d'emplois

From:	NAME: XXXXXXXXXXX @MSO           <XXXXXXXXXXXXXXXX@A1@POWDML@PKO>
Subject: RELEASE & Q&As                                                         3
Date:	02-Jul-1996
Posted-date: 02-Jul-1996
Precedence: 1
To:     See Below

THE FOLLOWING RELEASE AND Q&A's ARE FOR YOUR INFORMATION.

PLEASE REFER ALL CALLS TO:  JAMIE PEARSON 508-493-9283 OR
DAN KAFERLE 508-493-2195.





Investor Contact:  Pat Spratt
                   (508) 493-7182

Media Contact:     Dan Kaferle
                   (508) 493-2195

Digital Shareholder Direct: 
(800) 998-9332
http://www.digital.com/info/finance




      DIGITAL EQUIPMENT CORPORATION SAYS FOURTH QUARTER RESULTS

                     WILL BE BELOW EXPECTATIONS


   ...Will take $475 million restructuring charge to cover actions
               necessary to improve company operations


   ...Management remains confident in company's ability to achieve
                  competitive financial performance


MAYNARD, Mass., July 2, 1996 -- Digital Equipment Corporation today 
said despite continued strong growth in its 64-bit Alpha products 
and services, fourth quarter results will be well below its 
expectations.

     In addition, the company said that it will take a restructuring 
charge of approximately $475 million against its fourth quarter 
earnings for actions directed toward further improving the company's 
financial performance and strengthening its foundation for future 
growth. The company's fourth quarter, which ended June 29, and full 
year results will be reported July 30.

     "Although we have made significant progress, particularly with 
respect to establishing a long-term strategy, we obviously are not 
satisfied with the current business financial results," said Digital 
chairman Robert B. Palmer. "The financial performance of our 
personal computer business is unacceptable. In addition, we are 
experiencing a significant slowdown in several European markets."


     Vincent J. Mullarkey, vice president and chief financial 
officer, said the company expects fourth quarter profits to be 
significantly below current estimates with revenue lower than the 
same period last year.

     "We understand our business problems," Mullarkey said. "Our 
management team is taking the steps necessary to address those 
problems.

     "Over the past months, we reduced PC desktop inventory in the 
channels and reduced costs. At the same time, we have begun to 
implement our Windows NT, client/server commercial strategy," 
Mullarkey continued. "We are making progress, but not yet at the 
levels originally anticipated. In addition, we are experiencing the 
impact of unusually aggressive industry pricing pressures."

     Digital indicated the restructuring charge will cover the costs 
associated with the elimination of approximately 7,000 positions 
worldwide over the next 12 months and related facility 
consolidations.

     "This additional restructuring enables the company to move to 
the next level of efficiency and lower cost structure necessary to 
attain competitive financial performance," said Palmer. "We also are 
addressing those areas which have negatively affected our financial 
performance to ensure that we meet our strategic objectives."

     Palmer said while the company faces some significant short-term 
business issues, its 64-bit Alpha-based systems and services are 
showing impressive growth.

     He said the $500 million contract announced June 25 with 
Citibank, is proof of Digital's growing strength in the service 
area. The company's strategic alliances with Microsoft, Oracle, 
MCI and Computer Associates, together with the semiconductor 
alliances with Samsung Electronics and Mitsubishi Electric, are 
demonstrations of the company's success in executing its strategy, 
Palmer said,

     "Digital clearly is well-positioned for continued growth in our 
strategic products and services portfolio," Palmer said. "We are 
confident that we will be back on track and showing significant 
financial improvement by the end of the calendar year. We also are 
confident that the financial performance of the company will be 
among industry leaders within two years."  

     Digital Equipment Corporation is the world's leader in open 
client/server solutions from personal computing to worldwide 
information systems. Digital's Intel and Alpha platforms, storage, 
networking, software and services, together with industry-
focused solutions from business partners, help organizations compete 
and win in today's global marketplace.



     Statements contained in this press release which are not 
historical factors are forward-looking statements as that term is 
defined in the Private Securities Litigation Reform Act of 1995.  
All forward-looking statements are subject to risks and 
uncertainties which could cause actual results to differ from those 
projected.  Such risks and uncertainties are discussed more fully in 
the company's latest quarterly report on Form 10-Q and the company's 
other filings with the Securities and Exchange Commission.
                                ####





                              MANAGEMENT Q&As


1.  Q:  YOU FORECASTED THAT THE PCBU WOULD SHOW IMPROVEMENT IN Q4.
        WHAT HAPPENED?

    A:	We did not forecast that the very sharp price declines seen in
    	Q3 would continue into Q4, but they did, both on finished goods
    	and some key components like DRAMs.

    	High channel inventory, which has declined significantly but 
    	not as fast as we would like, had two effects.

    	- Depressed sales into the channel
    	- Magnified the effect of the price reductions due to our 
    	  standard price protection policies for the channel

    	Q4 results also affected by some residual issues from our exit
    	of the consumer market and by the sluggish economy in Europe.


2.  Q:  WHAT ARE YOU DOING TO IMPROVE PERFORMANCE IN YOUR PERSONAL
        COMPUTER BUSINESS?

    A:	Aggressively reducing channel inventory, particularly in North
    	America.

    	Significantly reduced costs to align our business with the 
    	realities of the marketplace introduced competitive new products

    	- PC products, particularly servers, are now an integral part 
    	  of the portfolio carried by Digital's enterprise sales force


3.  Q:  WHAT IS THE OUTLOOK FOR PC'S IN Q1?

    A:	We do not forecast results, but we do expect substantially 
    	better performance for several reasons:

    	- Reduced expenses at every level of the business

    	- A much better balance of channel inventory, which should reach
    	  a competitive level by the end of Q1

    	- A sharper marketing focus on high-margin products, particularly
    	  servers

    	- A stronger, fully refreshed portfolio of products




4.  Q:  WHEN YOU TALKED TO US ABOUT THE PC BUSINESS IN Q3, YOU ALSO HAD AN 
        OPTIMISTIC OUTLOOK FOR THE COMING QUARTER. WHAT'S DIFFERENT NOW?

    A: 	As we determined the depth of the problems, we took significant
    	actions to improve performance.

    	The benefit of these actions will begin to take hold in Q1.

5.  Q:  WHAT IS YOUR STRATEGY FOR GROWTH AND PROFITABILITY FOR THE 
        PC BUSINESS?

    A:	Intel-based business is an integral part of company-wide strategy
    	to become the industry leader in providing enterprise solutions 
    	built around Windows NT.

    	- Includes platforms, software and services

    	- Primary focus in PCs will be on Intel servers, where we already
    	  have a strong market position.

    	- Continue to be major player in this business, providing 
    	  customers with access to a leadership line of Windows NT 
    	  systems and services across both the Intel and Alpha 
    	  architectures.

    	- Although we will invest heavily in servers, will continue to
    	  provide Intel-based clients to our enterprise customers as
    	  part of their client/server solutions.

    	- The way we provide clients to customers may evolve in the 
    	  future depending on the demands of our customers and the 
    	  need to reduce the risk to the company of the volatile, 
    	  commodity-driven desktop business.

6.  Q:  DOES THIS MEAN YOU ARE GETTING OUT OF PC DESKTOPS?

    A:	To the contrary, we will continue to provide desktop solutions
    	for our enterprise customers.

7.  Q:  YOU HAD BEEN DOING BETTER IN EUROPE IN SPITE OF A WEAKENED
        ECONOMY -- WHAT'S CHANGED IN THE LAST FEW MONTHS?

    A:	The economy in Europe has worsened and has had an increasing
    	impact on our business.  In addition, we have taken actions to 
    	address operational management issues which also contributed
    	to weaker business performance.




8.  Q:  ARE THERE MORE BUSINESSES YOU WILL DIVEST OF AS A RESULT OF THIS 
        POOR REVENUE PERFORMANCE?

    A:	As we have stated in the past, we are continuously reviewing our
    	portfolio of businesses for strategic fit.  As we implement and 
    	refine our strategy there may be certain businesses to divest.

9.  Q:  COULD THERE BE ANOTHER SURPRISE WHEN YOU RELEASE FINAL JUNE Q
        EARNINGS?

    A:	Until the books are closed, we do not know the final results.
    	However, we believe we have an understanding of where the business
    	is and we are communicating that to you.

10. Q:  CAN WE EXPECT MORE MANAGEMENT CHANGES?

    A:	It would not be appropriate to comment at this time.  As we 
    	continue to implement and refine our strategy and organization --
    	there could be changes.

11. Q:  WILL SEPTEMBER SHOW A LOSS?

    A:	We do not predict future earnings.

12. Q:  YOU SAID LAST TIME -- 'THE STRATEGY IS WORKING'; EXPLAIN YOURSELF;
        THE RESULTS DON'T REFLECT IT.  WHY NOT?

    A:  The strategy is working.  Our dual platform server strategy and 
    	overall Alpha business are performing to expectation coupled with 
    	our growth in the UNIX and NT environments.  We are well positioned
    	for on-going success in these major strategic areas.

    	In addition, we have formed strong alliances with Oracle, 
    	Microsoft, Computer Associates and MCI and most recently Samsung,
    	which enhance our ability for continued success in executing our
    	strategy.


13. Q:  CAN YOU BE MORE SPECIFIC REGARDING THE RESTRUCTURING ACTION
        TAKEN AT THIS TIME?

    A:	As we refine our strategy, we have accelerated our plans based on
    	the latest performance of some of our businesses.

    	These actions are necessary to bring the company to leadership
    	financial performance.




14. Q:  CAN YOU BREAK DOWN THE COMPONENTS OF THE RESTRUCTURING?  WHEN
        WILL THE BULK OF THE RESTRUCTURING BE USED?

    A:	The final audited plan will be disclosed by July 30.  It will be 
    	approximately $475 million, affecting approximately seven thousand 
    	people over the next 12 months.  Actions are being taken now.

15. Q:  WILL THE IMPACT OF RESTRUCTURING BE WORLDWIDE?

    A:	Yes, all our geographic areas will be affected -- Europe, Americas,
    	and Asia Pacific.

16. Q:  WHAT IS YOUR ENDING HEADCOUNT GOAL AND WHEN DO YOU EXPECT TO
        ACHIEVE IT?

    A:	We have no target number.  Targets and goals are based on 
    	business performance and the number of people determined necessary
    	to achieve the business objectives.

17. Q:  WHAT IS THE STATUS OF FINDING A PARTNER FOR FAB 6?

    A:  We will continue to opportunistically explore alternatives for 
    	partnership.  

18. Q:  IF YOU CUT 7,000 JOBS, WON'T THAT AFFECT SERVICES?

    A:	No.  We are making changes to enhance our ability to serve our 
    	customers.

19. Q:  WHAT IS THE SEVERANCE PACKAGE?

    A:	4 weeks of continuous pay, PLUS additional weekly TFSO payments
    	based on years of service.

    	Continuation of medical, dental, and life insurance coverage 
    	for a period based on service.

    	Formal outplacement assistance for a period of six months.
     

I need some help here... From the Livewire post:

>   In addition, the company said that it will take a restructuring 
>   charge of approximately $475 million against its fourth quarter 
>   earnings for actions directed toward further improving the company's 
>   financial performance and strengthening its foundation for future 
>   growth. 

(snip)

>         Digital indicated the restructuring charge will cover the costs 
>   associated with the elimination of approximately 7,000 positions 
>   worldwide over the next 12 months and related facility consolidations.


Now let's assume the typical person to be layed off makes $75K/year (seem a
bit high, eh?) and has been around the company for 10 years or so.
According to the latest "package" that person'll be eligable for 10 weeks
of pay plus benefits. The salary will come to approx $14,500 and let's say
another $2K for benefits for a total of $16,500 per laid-off employee. 

Now multiply that $16,500 by the 7,000 unfortunate folks and you end up 
with a cost of $115,500,000. We're taking a charge of $475,000,000. That 
leaves $359,500,000 for "related facility consolidations". 

Does that seem reasonable to you folks? Sounds to me that if we're REALLY 
gonna spend that kind of money on facility consolidations we must be
considering consolidating something pretty big and expensive...

    I did the same math yesterday!  Seems like a pretty high # for laying
    off just 7000.  They must be figuring to take a real beating in
    facilities consolidation!
    
    Paul

    Depends...are there 475 Enrico's? :-)
    
    

    Don't forget the time of the people preparing your "Dear John"
    paperwork, validating the demographics of the layoff, the payments to
    Drake Beam Moron, etc.  Probably another $10k per head right there.
    I wonder if they get to pay your accrued vacation out of that pot too -
    another few $k per head if they do.

    re.61
    One should also take into consideration that in countries outside the
    US local laws require somewhat "more generous" packages.
    
    Charles

    re.48
    All this explanation was irrelevant given the info sent in .60
    I wonder what's really going on and if this is not an attempt to gag
    those who dear to speak up loud and clear.
    
    re 65.
    Quite right. If we see overhere in Europe what alms our colleagues get
    in the US !! Sacking people overhere costs the company in general many
    months/even years per head. I wished it would even cost them much, much
    more, that would perhaps make them start to think.
    
    Regards
    
    Frans

    To my opinion, Digital has, what it reserves. We still have an
    unhealthy level of politics, favoritism and even more than before personal 
    turf wars to keep us from being successful.
    
    It is a management issue, but most of us should also look the
    motivations of our own actions. Are we doing something because of our
    own short term interests or because of, what is needed for the business
    and thus for our own long term interests as well. On the other hand, our
    metrics being what they are, it doesn't seem to matter that much
    anyway. You can still get better personal results by having good
    internal connections, than being customer focused.
    
    And the metrics: If our sales force is not credited in selling PCs
    (problem fixed?), software, services, why would they spend time with that?
    There are very clear examples, of what this creates. Lets take the
    Netscape software, which we have contracted to resell. We have a better
    contract and as a result a better price for these products, than the
    local Netscape's official distributor. However, it's not us, who sell
    these products. It's the local distributor. That's because nobody is
    measured in selling these products, and there is zero support for the
    sales. That same is rapidly happening to our own Internet software, if 
    ISBU doesn't get it's organisation in place pretty fast.
    
    Customers are not buying Alphas to get a nice 64bit technology computer
    box. They buy boxes to solve a business need. Everybody has heard this
    clich�, but very little is done to take that into account in our
    organisation. Where is our support to garantee, that local applications 
    exist....., that whatever international Digital's or third party software 
    we have available through Digital is pushed to the market AND SUPPORTED....
    ., that support to hammer information from our products to the consulting 
    world exists....., that we have sales and technical support material, 
    which is easy to find, easy to deliver, easily consumable (understandable),
    extends to detailed information levels, when needed without extensive per 
    customer resource consumption.....
    
    E.g. Silicon Graphics and SUN seem to have a lot better local
    visibility with a lot less local people. Could it be, that their
    international marketing and technical support organisation for local
    people is in better shape?
    
    
    --Ritva
                                           

    
    Since Enrico has gone and 7,000 have to go.  Does anyone think that 
    we might just might pull out of PC's (but stay in the Intel Server
    market where margins are bigger and our systems better)
    
    Mike

A personal opinion is that we should stay. The Computer Market is the PC
market, if we pull out there we may as well shut up shop. What we need to
do is look at Compaq, Packard Bell, Gwy2k, etc. and figure out what they do
right and we do wrong. 

Another suggestion is 'badge engineering' PC's, but we tried that before as
well. Unless you can get your manufacturer to price in lock step with you
you only end up funding their marketing. 

I think a lot of the announcement is just 'Spin'. I must confess I was
surprised to learn that European economies are 'soft'. Britain is
in a small pre-election boom. France and Germany have structural problems but
nothing much has changed over the last year. Apart from Spain, are any
other EU Coutries in recessions?

They said there is over-supply in the channels (12 wks vs 6 wks industry 
standard) and yet in Q4 I heard of internal customers having extreme
difficuly in getting hold of systems and parts. A good test of this
is that some of the channels ought to be discounting heavily to
dump the excess inventory - so if anyone spots a sale then let me know
as I could be persuaded to buy a cheap Notebook! 

Mark

 

    Re .69) A paradygm "The Computer Market is the PC market".
    If this is true why oracle is trying to sell Internet Stations ?
    Why Netscape is so healthy ?
    Why microsoft is trying to be a mjor actor on the stage of internet ?
    
    Remeber what said Marshal Mac Luan : "The media is the message"
    (Gutemberg galaxy)
    
    Today the media is Internet / Intranet
    
    So say "The computer market is the media" what the media need and you
    will see rapidely the market.
    
    My 2c   

    i believe digital 'knows' it doesn't know the peecee market like it
    should; maybe the whole crux is the marketing shortfall we have...I
    mean, i still remember the chaRLIE chaplin IBM commercials but i tell
    people we are advertising, and they say where, when...
    
    this is not just for peecees but we should e marketing the gyterwpos
    outta alpha so that alpha is a household word.  even non-digital people
    in this industry doesn't know or haven't heard about alpha yet, 4 years
    later, and this is definitely the fault of the SLT.  the other big
    glaring area concerns our internal systems and processes...we were
    bloated w/people because in our heyday, we threw people at problems
    instead of improving the processes...cutting the people WITHOUT
    improving the processes only sets u up for failure, whether it's now or
    6 months or 24 months from now...u can't downsize w/o improving
    MEASUREABLY the processes so that the poor individuals left get be more
    efficient at their work...l kniow of instance after instance where we
    haven't we tooled the company where we are then going out the way way
    we do business in a more timely and efficient manner...people have
    complained for years Digital is tuff to do business with, and we
    haven't changed that perspective at all.
    
    let's kill 7000 headcount and hire on another 300 ibm vps to tell us
    what's wrong and how to fix it...

Someone added DEC's entry from the SIC disclosure database (whatever that is) in
the DIGITAL_INVESTING conference (Note 288.6 on HUMANE::) and I finally found out
how much of the restructuring charges went towards "Employee separations".

The note is very long but here is an extract of relevant info and my
interpretations:


  Accrued restructuring costs (in thousands)
  Year ended            July 1, 1995   July 2, 1994   July 3, 1993
  Balance, beginning of
    year                  $1,351,075     $  738,989     $1,546,904
  :
  Cash expenditures:
  Employee separations    $  562,629     $  532,000     $  651,300
  :
  Number of employee
    terminations due to
    restructuring
    actions                    7,400         12,000         17,000


The simple arithmetic on these figures show that we are paying more per person
for each wave of redundancies: $38K/person in 1993; $44K/person in 1994 and a
whopping $76K/person in 1995. I wonder how many people actually came close to
these *average* separation figures. 

It also looks like we are using a fair percentage of the restructuring charges
for people related charges.

Chris.

    
    re 'weakness in key European markets', previous.
    
    True, there is some frictional difficulty in France and Germany, as
    economies. But where we are suffering is in *our* ability to sell and
    deliver into those markets. Large, long time accounts are shrinking,
    due to *execution* (bad) of recent and previous restructuring efforts
    in those territories. So, we reap what we sow, but with a time lag such
    that we all forget how we ended up in this (today) mess.
    
    What was that about 'Go To Market' ?
     
    The Middle layer will  now focus inward (again) over the next few
    months, trying to cling on to a raft that gets smaller. We won't see
    the effect of that until the next downward blip in sales, say 3
    quarters or so out. Customers. Remember them ?
    
    
    AW
    

    RE: .71
    
    
    I don't belive that the alpha being a household word is the solution.
    The information superhighway is a household word, and a lot of people
    still do not have any idea what the internet is.
    
    I agree with what you are saying about DEC being rather weak in its
    advertising compared with the likes of IBM and Microsoft. And nothing
    makes me angrier than to see magazines raving on about the Pentium Pro and
    the like and no-one is talking about the Alpha. MAYBE IT IS OUR FAULT,
    but at the same time what does the average household want with an alpha
    anyway? It is all very well knowing it is the fastest chip on the
    market but unless you have an application to use it, then why you would 
    you want it. That will not help us.
    
    The industry knows we have the fastest processor around, because
    industry are really the only people who are going to make use it. It is
    like saying to someone who has a beat up old car.
    "Here is a new BMW, it is faster and, you will get more enjoyment out of
    it", but if you said to them, "Here is a F1 car that will be driven by
    the Williams team in next years Formula 1 season." The first thing that
    they would probably say to you is, "why would I want to go 180mph. Even
    if I wanted to, I couldn't, so why buy it?"
    
    What I am really getting at is, the alpha being a household name is not
    going to help us, because the average household has not got the need to 
    work at that speed. But if the industry know about it, then they may see 
    that it would be worthwhile investing in the technology. It is all
    about about selective advertising to the right market.
    Not sponsoring the Ballet as we do here in the UK!!
    
    Steven
                                

    Steven:
    
    u mean we DIDN't sponsor the ballet????   SHAME on us!
    
    :-)

    Better that way.  I really hated it when Dame Margot Fonteyn wore those
    tutus with DIGITAL on one side, and ALPHA AXP on t'other.  Not to
    mention "Whatever" on the left sole of her ballet shoe, "it takes" on
    the right.
    
    Only kidding :-)
    

    re: Digital and pc manufacturing.
    
    Anyone consider that Samsung (our latest partner du jour) also owns
    about 40% of AST Research (Yet Another PC Manufacturer) - which
    might lead us back to the built-to-our-spec days again - at least in
    the desktop/deskside space? We *might* still build Intel servers, but
    it won't surprise me if the other shoe hits the floor and our low
    end/low margin boxes come from Samsung et al...

    But Alpha *IS* a household word!  See, it's right here on this box of
    cereal!  And I can even eat an AXP! :-)
    
    				Steve

    you just can't layoff 7000 people from this company without selling off
    or chucking out a segment or two.
    
    I'll bet we stop manufacturing PCs.  We'll sell desktop solutions, but
    they will be PC Utility type deals, where the desktop includes a Compaq
    or whatever.. and a bunch of our services...
    
    I'll bet we can say goodbye to the printer business right after the
    memory busines,....

>    I'll bet we stop manufacturing PCs.  We'll sell desktop solutions, but
>    they will be PC Utility type deals, where the desktop includes a Compaq
>    or whatever.. and a bunch of our services...
    
If that's gonna happen how on earth I make sure my still exististing 2
years warranty for my Venturis 5100 is still void after I'm history in
August :-) :-)

	Tero

>If that's gonna happen how on earth I make sure my still exististing 2
>years warranty for my Venturis 5100 is still void after I'm history in
>August :-) :-)
    
    No problem - consider it void right now! ;^)

    Hi People,
    
    All this begs the questions, viz:
    
    1. Where to now?, and/or
    
    2. Is this the end (a la Jim Morrison)?
    
    Paul W
    

>   Re .69) A paradygm "The Computer Market is the PC market".
>    If this is true why oracle is trying to sell Internet Stations ?

They are not yet are they? I wish them luck but so far the $500 Internet
device is just wishful thinking. 

>    Why Netscape is so healthy ?

My Netscape runs on a PC, I bet most do. It's the right software on the
right day on the right platform.


>    Why microsoft is trying to be a mjor actor on the stage of internet ?

Probably for the same reasons as Netscape.


I'm not convinced these Internet boxes are really going to catch on. I
find early weekend mornings are about the only time I can get sufficient
bandwidth to run Netscape now. 

M   

    re .73
    Went to market - couldn't sell.
    The weakness in the French economy which is cited as one of the reasons
    why we will make lousy figures is a myth.Weakness in the economy is
    certainly not reflected in the demand nor the results of competitors.
    
    We have never had so much demand - to the point that it is getting
    embarrassing to respond in case we can't come through if we win a deal.
    I leave you to draw your own conclusions..

>I'm not convinced these Internet boxes are really going to catch on. I
>find early weekend mornings are about the only time I can get sufficient
>bandwidth to run Netscape now. 

  Then you need to change your Internet provider or you only try and read the
  most read ie busy web sites.

  	mikeP

    
    
    RE:  the PC Market is the Computer Market
    
    see the story on Digital in this weeks ECONOMIST, page 56.
    
    Kaizad

    Gist?
    

    These paragraphs must have been missing from our Management's copies of
    Stephen R. Covey's "The 7 Habits of Highly Effective People"
    
    "There are organizations that talk a lot about the customer and then
    completely neglect the people that deal with the customer - the
    employees.  The Production Capability principle is to always treat your
    employees exactly as you want them to treat your best customers.
    
    You an buy a person's hand, but you can't buy his heart.  His heart is
    where his enthusiasm, his loyalty is.  You can buy his back, but you
    can't buy his brain.  That's where his creativity is, his ingenuity,
    his resourcefulness.
    
    Production Capibility work is treating employees as volunteers just as
    you treat customers as volunteers, because that's what they are.  They
    volunteer the best part - their hearts and minds."
    
    The conclusion I draw is that as employees are treated poorly, customer
    satisfaction will show a equal level of decline... and we continue the
    downward spiral.

>Someone added DEC's entry from the SIC disclosure database (whatever that is) in
>the DIGITAL_INVESTING conference (Note 288.6 on HUMANE::) and I finally found out
    
    You're welcome ;-)  The disclosure database is available at most
    university libraries.  I got the DEC info off the CD-ROM resource
    system at Arizona State Univ.
    
    Mike

    Re: Europe
    
    don't know how true this is, but I'm told some countries (i.e.,
    Germany) require a larger percentage of retirement (i.e., 60%) with 
    severance pay.  
    
    Mike

    re .90: I don't understand what you're saying...
    
    DEC Germany has a (legally binding) contract with the union not to lay
    off anyone before end of this year. (Formally, it only applies to union
    members, but generally, employers honor it for all employees). What
    happens after that is obviously open.
    
    The minimum "package" is typically 2 weeks pay for each year worked,
    though there's no clear cut legal requirement (plus the salary for the
    notice period, if you're asked to leave immediately - this would
    typically be 3-6 months or so).
    

    InformationWeek 8 July 1996 pg. 18
    Digital Cuts Jobs as Revenue Falls
    
    Can't find the article on the net....
    
    ... The 7,000 cuts will come from all business units, but primarily
    from sales and sales support. ...
    
    Notice - no cuts in Marketing mentioned just everyone else selling and
    supporting.  I wonder what will happen when there are no more sales or
    support to cut to meet expectations.  I wonder if they'll have a
    massive hiring campaign so they can have the people to cut.  

    [PC Week Online]    July 8, 1996 9:00 AM ET
                        Wounded Digital:
                        Should it pull plug
                        on Intel-based PCs?
                        More Alpha focus urged

                        By Lisa DiCarlo

    -------------------------------------------------------------------

              As Digital Equipment Corp. braces for a
              larger-than-expected fourth-quarter loss,
              observers and Digital executives alike are
              pointing to the company's Intel-based PCs as
              the albatross around its neck.

              Bloated inventory of PCs using Intel Corp.
              processors--combined with increased pricing
              pressures and devastatingly weak European sales
              within its Computer Systems Division--have left
              Digital well short of its financial
              projections.

              To stop the bleeding, the Maynard, Mass.,
              company is considering outsourcing some of its
              PC operations. But some observers believe the
              company should go one step further: bow out of
              the low-end corporate PC market and focus
              solely on Alpha-based systems.

              Digital CEO Robert Palmer last week
              acknowledged that the PC Business Unit is
              evaluating whether to maintain both Venturis
              and Celebris commercial desktop PC lines "to
              see what the most appropriate posture is for
              Digital, to see where we can add the most
              significant value."

              "Our PC business is a serious problem," Palmer
              said during a teleconference, where he
              announced plans to lay off 7,000 workers and
              close facilities in the United States and
              Europe over the next 12 months.

              Palmer last week assumed the role of acting
              vice president and general manager of the
              Computer Systems Division, replacing the
              deposed Enrico Pesatori, who was unable to turn
              the PC group's fortunes around. Palmer has no
              immediate plans to fill the position.

              "I plan to stay on until I have a better grasp
              of the details of that business, [and] then
              I'll make some decisions based on what I learn
              in the next few months," he said.

              That news drew concern from some of the Digital
              faithful who said Palmer is stretched too thin
              with his present duties.

              "There's no way the products would get the
              attention they need," said Matt Haley, director
              of channels marketing at Intrinsa Corp., in
              Palo Alto, Calif. "I will not buy from them for
              several months because it's hard to believe
              they'd be organized after laying off 7,000
              people."

              Digital, which has garnered technical and
              financial successes in its internally developed
              Alpha workstations and servers, would be much
              better off focusing on Alpha running Windows NT
              and Unix, said observers.

              "They need to be in the [Intel desktop]
              business for a complete client/server solution,
              but it's not clear how much assembly they need
              to provide," said Vadim Zlotnikov, an analyst
              at Sanford C. Bernstein and Co., in New York.
              "They could realize [significant] sales but
              minimize investment" by outsourcing
              manufacturing, Zlotnikov said.

              Digital, in fact, is stepping up its efforts to
              push Alpha as a lower-cost, high-performance
              corporate desktop. It plans to release next
              year a version of its Alpha 21164 CPU, targeted
              at corporate PCs starting at $2,500.

              Those systems will feature simple
              configurations and standard PC components and
              will run the new Alpha 21164PC chips, which
              include built-in videoconferencing, multimedia
              and three-dimensional graphics technologies.

COMPUTERWORLD SURVEY REVEALS DIGITAL CUSTOMERS QUESTION VALUE OF
RECENT LAYOFF ANNOUNCEMENTS AND EXECUTIVE CHANGES

July 8, 1996, 9:42 AM EDT

FRAMINGHAM, Mass., July 8 -- Digital Equipment Corporation
(NYSE: DEC) (DEC) customers are not taking well the layoffs and management
changes announced by the company last week, according to a Computerworld
newspaper survey of 100 DEC customers.

Asked whether they felt Digital's recent decision to layoff 7,000 employees
and replace its top PC Executive, Enrico Pesatori, would help the company's
long-term fortune, 55 percent of the customers said the moves would not
help, while only 32 percent felt that they would.

Despite lack of accord on this recent decision, however, most still remained
in support of Digital's overall marketing thrust.

    -- 64 percent said Digital should not drop out of the PC business

    -- 56 percent supported the Digital strategy for cutting direct
       sales and moving more products through third party channels

    -- 51 percent felt Digital was generally on the right track with its
       sales and marketing strategy

    -- 63 percent felt Digital's strategic development and marketing
       relationship with Microsoft has been positive

The issue that most customers agreed upon was that Digital should bring its
VMS workstation fees in line with its NT and UNIX products. VMS is a
proprietary operating system that was Digital's mainstay software for many
years.

Summary of Responses
The Computerworld survey of 100 information systems professionals who are
DEC customers asked:

-- Do you think Digital's decision to layoff 7,000 more employees and
replace its top PC executive help the company's overall fortunes?

32% Yes

55% No

13% Uncertain

    -- Should DEC drop out of the PC business?
        33% Yes
        64% No
        3 % Uncertain

-- Digital is cutting direct sales and pushing more products through third
party channels. Is this good news for customers?

56% Yes

41% No

3% Uncertain

-- Digital's VMS workstation fees are typically about $1,000 more than
comparable fees for NT and UNIX products. Should these prices be equal?

87% Yes

12% No

1% Uncertain

-- Do you believe Digital is on the right track with its sales and marketing
strategy?

51% Yes

40% No

9% Uncertain

-- Has Digital's relationship with Microsoft been a positive for customers
or a negative?

63% Positive

8% Negative

29% Uncertain

    
                          

    Todays Boston Globe has an editorial cartoon in the business section
    about the DEC layoff.
    
    It shows Plamer sitting on a show shine chair reading a newspaper with
    a headline about low DEC profits. His foot is extended and the
    shoeshine man is sprawled on his back, seeing stars, wearing a shirt
    with Loyal Employee on it. The caption is Knee Jerk reaction.
    
    Guess the Globe doesnt think much of the latest layoff plan either.

> Guess the Globe doesnt think much of the latest layoff plan either.

They're just a bunch of union-loving pinkos.

___Pete

> Guess the Globe doesnt think much of the latest layoff plan either.

        For the past decade or so they've printed mostly bad news
        about Digital.

        Bob

    Re >>> For the past decade or so they've printed mostly bad news
    	   about Digital.
    
    Agreed...though my cynical side sez they've had plenty of ammo.

    While the Boston Globe has had its share of attacks on Digital over the
    years, it appears that they may be getting some encouragement on this
    one.  Other leading publications in the field, some mentioned in this
    Notes conference and others highlighted elsewhere, are questioning the
    real benefits to the business and customers of the continual cutbacks. 
    It would appear that we have ridden the
    downsizing/rightsizing/dumbsizing horse about as far as a company can
    before tangible results have to be shown.  I have noted in the past
    that every time we announce negative results, we immediately throw out
    how many 1000s of employees will be cut.  That song-and-dance ("we have
    bad news, but the good news is that we are cutting ....") went out
    awhile ago in the corporate world as far as receiving anything
    positive, but we still cling to it.  Makes one wonder if we have any
    real idea of where we are heading, or want to head, as a company.
    
    A company that is categorized as a Growth company, which Digital still
    is, can only cut itself so far before customers, employees, and the
    markets realize it no longer deserves to be in the Growth category.  I
    feel we are getting closer to that realization every day, even more so
    recently.
    
    Chuck  

    shrinking as a way to fit into 'snow-white and the seven dwarfes'
    scenario. 
    

re: .99

Ditto. 

	To me, the 7000 heads announcements seemed to be a reflex reaction for 
the analysts. I also think that Mr. Palmer later realized the effect that this 
announcement would have on Digital employees, hence the company wide memo the 
next day. JMHO, of course.

	C'Ya,
	Wayne

	

Let's see:
Early in Q4 there were stories about 7 - 10K layoffs coming.
The re-alignment of the ABU/SBU etc. was announced, which made it plain
that multiple sales organizations were to be merged.

Then (shock!!) not much selling happened in Q4...

Why is it so hard to connect the dots and come to the conclusion that
when you put people's livelihoods at risk, independant of their performance,
they will not be able to concentrate on the job at hand?

I know if I had been in sales, I'd have been paying more attention to job 
offers than to RFPs in Q4!

    
    
    What was that saying by someone.... You can't fool all the people
    all the time??? (I may have paraphrased, but you know which one I mean).
    
    I laughed hard upon reading the official excuses why DEC's performance
    is so bad.  Come on! Other companies do business, in fact in the same %$#^
    business in the so-called weak European markets, and in the same ^&%$
    PC business which is Digital's this year's scapegoat, but surprise, 
    surprise, they are NOT in the death spiral as Digital is, are they??
    
    So please, it is bad enough that the world really knows what's killing
    this company, we do not need these old and tired excuses repeated 
    --- it's frankly insulting (for the outside) and simply lies for us on the
    inside. 
    
    Actually these numbers do not surprise me one bit. It is quite
    well-known years back that the headcount goal would be around 40-45K
    (remember this was when the HC was 120K!!). It would be hell to
    cut and chop  over 66% of one's workforce too quickly, right?
    
    Well, I don't think this company will recover; too many FUNDAMENTAL
    problems remain that have festered over the years. I am convinced that
    NOBODY knows what to do. I do know that one cannot cut and chop to
    prosperity. Digital no longer has the critical mass of knowledgable
    workers out there to make things happen. I regret to say that BP
    himself, in my opinion, has been too isolated from reality, and the
    same management chain (the higher, the worse) are doing everything it
    can to protect its own backside and turfdom. It does not care about
    the company.
    
    

Reproduced without permission from "The Economist" July 6th.

"A Costly Credibility"

It now seem time to bury yet another piece of conventional wisdom in the
computer industry: the idea that every big computer firm needs to be in the
PC business. The latest victim of this delusion is Digital Equipment Corp.
(DEC) - a firm which until recently seemed to be recovering nicely from
a very rocky patch.
    On July 2nd Digital announced that it will lay off 7000 workers (12% of
its workforce) and take a $425M charge. The reason is mainly its PC losses
(estimated at up to $90M in the most recent quarter alone). The day before,
its top computer executive Enrico Pesatori resigned. DEC's PC business has
been in trouble for a long time. Earlier this year price competition forced it
out of the home market. Now it is re-jigging its business-PC division to focus
more on "servers" -  the powerful computers at the heart of networks- than
on desktop PCs. Servers can bring in four times as much profit.
    DEC is not however, planning to leave the PC market altogether. In this
it is resisting a trend. In the past year France's Bull, Americas NCR and
Britain's ICL have all given up on PC's, having lost a small fortune between
them. Each cose to concentrate on eht more profitable markets of consulting,
services and systems integration. Italy's Olivetti, which has lost more than
$2billion in the PC business so far, may do the same.
    Until recently such companies argued that they had to make PCs in order to
remain a force in the computer industry. This idea grew from two propositions.
The first was that the PC market, which is growing by 20% a year and passed
60M units last year, was one of the most attractive parts of the industry.
The other was that making PCs created a synergy across different lines of
business.
    Both propositions are now looking less robust. The PC business can indeed be
attractive, but big computer firms tend to be generalists. About half of DECs
revenues come from services, and much of the rest comes from chips, software
and other products of its own design. The winners in the PC business are
increasingly specialists, such as Compaq, that drive down costs through
economies of scale.
    As for synergy, companies hoped that their systems-integration business
would act as a sales channel for their PCs. But customers saw it differently:
systems integrators who pushed their own computers appeared to have a conflict
of interest.
    DEC is trying to circumvent this conflict by positioning its
system-integration business as an independent broker, and claims some success.
It also argues that its technical advantages in the demanding server business
more than make for its inefficiencies. It is not the only venerable computer
giant trying to fight it out in this market; IBM, NEC, and Fujitsu and
Siemens Nixdorf are all still at it, with varying degrees of success (though
most are losing money).
    The most plausible explanation got this dogged obsession with PCs is
psychological: the grand old men of the computer industry hate to think that
they are not involved in the most inventive and competitive part of their
business. They are also haunted by their history as makers of mainframe
computers; they seem to think that making PCs gives them extra credibility.
The question for DEC is how much moneys is it willing to lose to preserve
that warm feeling.
    

    
    
    
    Well, I was slammed by another noter for this little bit of 
    news. The proof is in the pudding, eh? This guy did have 
    RELIABLE sources.  
    
             <<< HUMANE::DISK$SCSI:[NOTES$LIBRARY]DIGITAL.NOTE;1 >>>
    
                        -< The Digital way of working >-
================================================================================
Note 4641.0                     Q4 Spin Control??                     26 replies
MARIN::WANNOOR                                       72 lines   4-JUN-1996 12:34
--------------------------------------------------------------------------------

    
    
    Well, here it is.... as (I believe) we all have been conditioned to
    expect. I agree that it may be speculative, but NOT highly speculative
    nor erroneous. I wish the short rebuttal pointed out at least what the
    errors are :-) Seems like Mr. Bliss has reasonably credible sources,
    wouldn't you say??
    
    Any of you heard differently??
    
    ***********************************************************
    
    
.... Salutations deleted [to protect the innocent :-)]....

As a clarification, Corporate Public Relations says the story in Computer 
Reseller News On-Line (see below) is highly speculative and erroneous.  If 
you happen to receive any calls, pass them to [deleted].  We will 
forward them to Nikki Richardson in Corporate PR, Nikki is the spokesperson 
on these issues.
                   
Thanks

-------------------------------------------------------

Computer Reseller News - On Line
Digital Layoffs Are Coming
5/28/96
By Jeff Bliss
Maynard, Mass.
.............

Digital Equipment Corp. is expected to lay off thousands of employees by July
1, according to sources at the company.

The job cuts would be made across Digital's nine business units, sources said,
but would focus heavily on Multivendor Customer Services (MCS) and the 
Systems Business Unit (SBU, sources said. "The big push is on to cut expenses,"
said one Digital insider.

Several sources inside the company estimated that as many as 10,000 employees
could be eliminated. Digital currently employs about 60,000 employees, down 
from a high of 120,000 in the early 90s.

A Digital spokesperson admitted segments of the company are being restructured
but would not comment on the possibility of layoffs.

MCS is the service and support arm of the Maynard, Mass headquartered company,
and the SBU manufactures high-end systems and software that run on the 64-bit 
Alpha chip.

Employees will be notified of the job cuts and other details of the
restructuring before the end of the company's fiscal year on June 30. "It'll 
probably happen in the next two or three weeks," a source said. The job cuts 
will be a result of the consolidation of divisions, sources said.

The company recently announced the Storage Business Unit, a group that has
experienced double-digit growth in recent years, would be incorporated into 
the SBU.

Digital is also combining its fast growing Windows NT business into the
Personal Computer Business Unit., which recently exited the retail computer 
business and posted an unprofitable third quarter.

The company also is clamping down on expenses, sources said. 

"They're making it hard to do any travel," the source said.

About 500 jobs were cut earlier this year from MCS, which is restructuring in
the wake of sluggish business among Digital's installed base of customers.

> Why is it so hard to connect the dots and come to the conclusion that
> when you put people's livelihoods at risk, independant of their performance,
> they will not be able to concentrate on the job at hand?

There are more fundamental problems here, than a job-loss scare causing
poor 4th quarter sales.  Business processes in the field have been badly
broken for the entire 6 years I have been in the field, with little
evidence of any improvements coming.  If anything, things have got more
broken as time has progressed.

Ram

    This is a very active note and there are many points covered and
    discussed. But here are a few thoughts:
    
    Last year I offered the PCBU a program whereby we would supply any of
    our VAR accounts with Digital PCs for their own internal business. I
    offered a single source order at distributor discount level. We would
    handle all the logistics and had a nifty piece of no-charge software to
    add to the package. The VARs would "fall in love" wiht our products and
    thus recommend/sell us vs the competitors they were using selling. 
    
    I got turned down. flat no. I couldn't beleive it - they had a
    warehouse full of PCs collecting dust and rejected our order for 4,000
    units.  At the price they normally sold them for! This was Stupid!
    
    This year I was assigned the unfortunate task of acquiring products
    from our PCBU to upgrade our internal work tools. 
    
    I want to tell you that my heart attack, kidney surgery, and abcessed
    teeth COMBINED were a PLEASURE compared to the pain and suffering I went 
    through for over 8 months (I'm not out of it yet) trying to get a few 
    Digital products.
    
    Here's what I have learned in the last 8 months.
    
    We don't product plan well
    We don't manage inventory at all
    We don't know to manage outside vendors
    We don't know how to forecast sales
    We don't use JIT - We use WTL (Just In Time -vs- Way Too Late)
    We EOL product before there is a replacement
    We sell PCs but can't supply modem cards
    We offer services that our service groups don't know about
    
    The products we finally got, I bought from one of our DISTRIBUTORS
    because I couldn't get them internally - in the case of Mobile media
    kits, Digital said there were none on hand and none on order - but I
    found that very same items at one of our distributors.
    
    Every promissed delivery date I got was missed by a factor of 4 to
    infinity.
    
    In short - we couldn't run a donut stand - let alone a PC business.
    This has nothing to do with the market, the economy. or the product.
    Companys are making money on PCs - there's plenty of money to be made. 
    
    We are badly managed !!!!
    
    You don't need a Harvard MBA to figure this out. Just a few days in the
    tank and you know more than you ever wanted to. Too bad our highly paid
    corporate leaders don't know how to roll up a sleeve or two and get
    dirty. If they had experienced some of this stuff themselves, why,
    they would have said - 
    
                    "THIS IS UNACCEPTABLE !" FIX IT!.  
                         YOU'RE EMPOWERED!
       
                         (but don't do anything without 6 V.P. signatures.....)
    
    Hey, other that that, I'm ambivalent.   
    
Regarding Enrico:
    
    Remember Bob McNamara ??? 
    
           He lead American Motors to ruin
                   and was promoted to Secretary of Defense
    	   Where he brought us the Viet Nam War
                   and based upon his success, 
     	   Became the President of the World Bank
    
    Following this sterling example for success, check out what EP did
    for/to Olivetti and Zenith before we bought him. Trust me, he was no
    fall guy - he earned it.  
    
                             

    The description in .107 should come as no surprise to anyone who has
    been close to Digital customers at any time in the last few years. 

    Is any of this -- ANY OF THIS -- getting to the SLT or to MSO?

    I can't mention names but there's rumors that a Product Manager in the 
    UNIX space that wanted to take the surplus Multia products and sell them 
    configured with Linus installed for $500-$800.  I believe there were
    in the 10K+ range of excess equipment running at 133 or 166Mhz Alpha
    processors.  Before the guy could blink the Multia were sent to the
    crusher - it was cheaper and less IRS hassels.  I wish I had the
    specifics. 

    re .107
    
    With regards to employee empowerment, we have had the same thing over
    here in the UK. No doubt you have been to the change forums, talking
    about employee empowerment. Well, there is still nothing we can do with
    out getting no less than 5 signatures. My manager, cant do anything
    without his manager, (the CSC manager), he cant do anything without the
    two signatures from his two managers. 
    
    At the end of the day there are so many managers that they are so out
    of touch with reality that they have no idea what is happening down
    here, where it counts. 
    
    Sure cut 7000 jobs, but we are the people who are making the money for
    the company. It is not the VPs doing any work, or the Territory
    managers. Before cutting 7000 people maybe they should think about how
    they will be affecting "their" current service offerings. You will
    notice that we are still expected to provide the same services with
    less than 50% of the manpower. I know because my group has to do this.
    
    
    I defy the likes of BP and other Territory managers to spend a day
    trying to do our job when you have no power to make any decisions, and
    there are no clear decisions comming from above either. 
    
    Perhaps BP would like to put his input in here. 
    
    Don't get me wrong I love working for DEC but don't make it impossible
    to a job which I am being goaled on.  

    re .110  10,000+ Alpha Multias sent to crusher
    
    But we can still claim impressive ("double digit") unit shipment
    growth for Alpha... where they end up getting shipped is a minor
    detail. ;-)
    K

    I have on my hands an internal report dsicussing HP's Sales and
    Marketing Strategy. In this document the following numbers are shown
    regarding HP's Revenue and #of Employees:
    
    Fiscal Year       #employees      $Revenue        Revenue/Employee
    -----------       ----------      --------        ----------------
    
       91                89,000         $14.5B           $163K
       92                92,600         $16.4B           $177k
       93                96,200         $20.3B           $211k
       94                98,400         $25.0B           $254k
       95               102,300         $31.5B           $308k
    
    Any comments?
    
    Jansen Pinto.          

    Yeah, how did they do it and what's their secret?  Next time can we hire 
    ex-HP instead of ex-IBM management.
    I knew some of the engineers in Colorado Springs that worked on the
    HP-Prism architecture and systems.  When they were first changing over
    to the new architecture they were in BAD shape.  Worst than what we're
    in now.  Everyone wrote their system business off.  Look at the
    comeback.  At that time, the moral within the engineering community was
    in pretty bad shape but they kept at it.  Their Management and
    Marketing has really made the difference.  Their systems are no
    different than ours.  We just can't seem to do it.  We're following
    Unisys and Burroughs.

    Secret?
    
    There is no secret; it's public domain carried twixt the covers of a
    multitude of business text books that repeatedly remind us that profits
    are due to a proper combination of investment, sound cost controls, and
    effective sales and marketing. 
    
    Long range plans typically take all of these factors into consideration
    so that the end result of an investment or hiring action is increased
    revenues. 
    
    On the other hand, if short term results are in demand, nothing beats a
    bullet 'tween the eyes of a few employees. Salaries and OH stop
    instantly while sales will roll to a stop. For the short term, profits
    will improve. 
    
    HP had a plan and built and staffed to it; Digital decided four years
    ago that it had to become a smaller company - we are following our plan
    too - it's just not that much fun is all. 
    
    And we have plenty of former HP people here.
    
    What we have that is broken is staying broken and all the potential 
    repair people are focused on survival if they haven't been shot
    already. 
    
    We talk growth; we walk shrinkage.
    

    Boy Howdy, them MBA folks on the SLT sure must be smart fellers
    and awl and I ain't as smart as them up thare but...
    
    I'm tired of seeing us lay people off only to have them come back to 
    haunt us from IBM, HP, SUN, SGI, and every other competitor in the 
    Industry.
    
    People I have worked with, helped, shared with, talked about the trade
    and (I believe) helped become better in their own right are now selling
    against me.  
    
    These folks also are winning as much as they are losing against our 
    rightsized, underbudgeted sales teams and our easy to do business with 
    Admin teams with all of Digital's business informationa vailable at the 
    touch of a button, and our street priced product line, and the stellar 
    marketing that keeps our product's unique value and strenghts at the 
    forefront of every IS customer's mind.
    
    With all this going for us, we lay people off and expect them to just go 
    away?  They don't go and start lemonade stands, bookstores, or start 
    selling medical supplies. 
    
    They stay in the business they know and love and most them leverage 
    themselves to their new masters by exploiting the most familar market 
    they know -- The Digital Market and customer base.
    
    This helps only to cut and reduce the Digital marketplace even more,
    kind of like circling the wagons and allowing some of the best shots
    to go and join a willing band of indians preparing to attack.
    
    We're worried about 15,000 multia's hitting the market an impacting
    our sales, just wait until the last 15,000 PEOPLE layed off start 
    earning a living by convincing Digital Customers that Digital is 
    still in trouble and you should really be buying from XYZ company
    instead... Far Fetched?  Not in my neck of the woods...BTW couple 
    of my customers bought 166Mhz Multias for $799 each from a broker
    who bought them from DEC for $435 each (min qty 500) before July 1st.
    And I can't sell Rot-Con for this company because of taxes...
    
    
    It's been my experiance that the people we've TFSO'd since we were at
    at 85,0000 employees have all been top flight (the people you really
    want to try and keep around)  and have almost immediately landed on 
    their feet: 
    
    -- Either with a customer (so they known all the remaining pressure 
       points to help drive the customer's position for maximum advantage 
       against Digital) 
    
    -- Or with a Competitor who is going to vigorously attack the Digital 
       Marketplace and Installed base.
    
    I don't mind working for a sale but fighting people I helped "Learn the 
    Business with"  or that I originally introduced into an account and now
    have to work against, is making my job much harder than just a few 
    short years ago... Today for every 1 of me at DEC there's 1+ EX-DEC
    waiting behind a ridge with a shot gun...  Paranoid?? You Bet! 
    I've been ambushed in Texas one too many times already...
    
    All sales today are uphill, most customers have other vendors as their
    prefered vendor, Ex-DEC people abound under every rock and stone with
    their own personal Axes to grind.  And add to this Digital continue to 
    lay off more good people who by sheer numbers, could help us start to 
    turn this around.
    
    HP, IBM, SUN, and SGI seem to value our people, when will we get the 
    message...
    
    JMHO
    
    John W.

    re .114
    
     ....but we did hire HP big guns --- Copperman and Gallop
    among others.
    
    .... all for nothing, I'd dare say.

    RE: .117
    
    John,
    
    Great message - couldn't have said it better myself.  As for the past
    laid off individuals in our neck of the woods (Upstate New York), I
    personally know of none in Sales who is not doing at least as good as
    when he/she was at Digital.  And those who went to Sun have far
    exceeded anything they could have made while at Digital.
    
    To lend fuel to your argument of what we are competing against, my
    principal, and in some cases only, competitor is Sun.  Their rep is an
    ex-DECie who actually worked for me when I inhabited a sales management
    role at Digital (best thing I ever did was leave that nonsense.)  His
    every wish is Sun's command: 
    
    1. Need loaner equipment?  It's on the customer's doorstep overnight,
    literally.
    
    2. Easy buying vehicles for streamlined ordering by customers? 
    They've got 'em.
    
    3. Support?  He has his own dedicated support person, a good one.  I
    haven't had a person in the geography supporting me in years (that's
    right, years!  You learn to fend for yourself that way.)
    
    4. Need even more competitive pricing?  No problem.
    
    5. Need Scott McNealy-level types to swing a deal?  They fly in (even
    McNealy has come into our backwater location.)
    
    I could go on and on, but the above actions have been instituted by the
    company whose products are being asked for by the majority of our
    customer base!  Can you imagine what it takes to unseat an incumbant
    with good products, who gives that level of support?  
    
    For those of you not in sales, this is the reality of the marketplace. 
    I just thank my lucky stars that I work as a team with the professionals
    that I do in the Federal Government sales force.  We hide a lot of sins
    and dirty laundry that our customers do not need to see.  But it is
    getting tougher every day, and continual downsizing, whether in our
    group directly or in groups that support our initiatives, won't make
    the job any easier.
    
    Thanks for letting me vent some frustration.
    
    Chuck  

    Another point to add to .113 regarding HP - If you add up HP's
    laser printer and ink-jet printer and print supplies business, it
    adds up to around $14B...  They get the high volume benefits and
    all those wonderful channels (to sell other things like PCs and
    networks and even calculators).  But how did they grow printers
    to that size of business?  It was really (in a sense) a windfall
    like Crysler had with the Minivan - but HP (and Crysler) created
    an environment which encouraged the risks in development and 
    research to nurture these winners.  I havn't seen that environment
    in Digital for many years now...  I must agree with others, that
    BPs strategy is to shrink Digital to fit the existing business
    rather than to actively seek out the next big wave.  Reinvention
    is not an easy task - but I bet the HP folks are having a lot more
    fun that we are right now...
    
    mark

    Regarding a further 7,000 job cuts and BP's unbelievably naive "next 
    level of efficiency" quotation ;
    
    	I remember several rounds earlier, when a fairly large
    layoff scheme was announced, a country manager justifying the
    particularly tough news by saying that in order to get rapidly to the 
    right size for the Corporation we were "prepared to throw a few babies
    out with the bathwater".
    
    Now this gobsmacked me but nonetheless, I accepted it as tough
    management real-politik at the time.  
    
    What I can no longer accept is that after several bathtub purges and
    lots of lost babies, we still have so much fetid bathwater.
    
    /Chris.

RE: .110

There is someone out there selling Multia 166MHZ systems for $900
(no monitor) with Linux on them.  DCG Computers in Londonderry, NH

Somebody seems to think they can make money on them.

    >15,000 PEOPLE layed off start  earning a living by convincing Digital
    >Customers that Digital is  still in trouble and you should really be
    >buying from XYZ company instead... Far Fetched?  Not in my neck of the
    >woods...BTW couple  of my customers bought 166Mhz Multias for $799 each
    >from a broker who bought them from DEC for $435 each (min qty 500)
    >before July 1st. And I can't sell Rot-Con for this company because of
    >taxes...
    
    This is worth repeating for anyone who perhaps didn't read this entire
    note.  
    
    I would sure like to see Bob Palmer address these issues.
    
    
    

HP's printer and printer supply business is $4B, not $14B.  Most of their 
growth is in the same areas that we try to compete in.  They just do a much, 
much better job than we do.

john

    >I can't mention names but there's rumors that a Product Manager in the 
    >UNIX space that wanted to take the surplus Multia products and sell them 
    >configured with Linus installed for $500-$800.  I believe there were
    
    As a side note, we used to sell Multias in a "Universal Desktop Box"
    configuration - with no OS - perfect for those who wanted to load Linux
    or whatever on it and not pay for Unix, NT, or VMS.  I tried the URL to
    see the page yesterday, and the page now lists the product as
    discontinued, see these other products (all of which come with an OS). 
    
    ...Not that we would have made much if any off of them anyway...
    
    I wonder if these were unloaded on the vendor mentioned back a few.

>HP's printer and printer supply business is $4B, not $14B.  Most of their 
>growth is in the same areas that we try to compete in.  They just do a much, 
>much better job than we do.

    In this mornings newspaper I read that HP will be closings it disk
    manufacturing operations(one US plant & one Asian), laying off 1500
    people and taking $150M charge. They have been losing money and have
    decided to get out. 

    It seems Digital selling it's disk manufacturing business to Quantum when 
    we did was a good move.

    -Bruce

	Universal desktop boxes preloaded with LINUX are offered all the
time by ONSALE (the online auction) http://www.onsale.com/ .  Minimum bid was
$799 at one time but the latest batch has a minimum bid of $25. (No monitor,
no keyboard.)

						--Doug

    re .123 and that sub rathole
        >15,000 PEOPLE layed off start  earning a living by convincing Digital
        >Customers that Digital is  still in trouble and you should really be
        >buying from XYZ company instead... 
    That's not even the 1/4 of it.  An equal or more number
    of current employees are being told by Digital to buy from XYZ instead of
    recomending, or even using, Digital products.

    Worry not, We've just recieved an announcement that we've gotten yet
    another V.P.
    
    Huzzah.

    re: .124 and HP - I don't mean to be a pest about this, but $10B
    is a big discrepency...  Here's the data from Technology Business
    Research, Inc for HP's Q1-96  (reprinted without permission)
    
    				1994		1995		1996e
    Laser Jet printers		4,080		4,550		5,100
    InkJet printers (and Fax) 	3,118		4,500	 	5,700
    Printer consumables		1,866		3,000		3,400
    
    total			9,064		12,050		14,200
    
    mark

    I've been here for 13 years and remember when we had 100K+ employees. 
    With that level of employment I've never seen this much activity in one
    particular note.  We're down to less that half that population and
    we're still here talking.  People are really concerned and frustrated.
    
    	Regards,

    the shareholders are really concerned and frustrated too ($35).

    
    .129
    
    You seem to forget that management is our core competency. That is why
    we have 215-220 VP's. The VP's know all and see all. Very few % wise
    will be let go in this next round of herd thinning. oh, a few will
    be sacraficed to the wolves, but grunts are going to take the biggest
    hits. It's nice to know that some things never change.

    we don't really have 200+ VPs ...do we..(gulp)

    Digital Savings Bank

    re .110  10,000+ Alpha Multias sent to crusher

I knew of one customer that would have bought several thousand Multias if 
only OpenVMS was supported on it.  Serveral other customers had also asked 
for OpenVMS on the Multia.

In fact, I booted OpenVMS on the Multia and proved it was technically 
possible.  However, due to company politics, this product was prevented 
from ever reaching the customers.

Sad...  Really... Sad...


						-Paul

    Looks like the Multia group was pushed under the PCBU just in time
    for us to take the bath on a boatload of unsold Alphas.
     

    Re: .110 and .138
    
    I don't know about the UNIX part, but there was a joint effort underway
    between the Multia group, and my group (Alpha Migration Tools) to
    create a low-cost Linux offering to move a warehouse full of unsold
    Multias.  The product tag was UDB - Universal Desktop Box. 
    Unfortunately, the UDB was cancelled (crushed) just as the first
    Linux/Alpha advertizement appeared (June, 1996 Linux Journal)
    The part that _really_ irritates me about the scrapping of these
    machines, ignoring bad timing, is that it was done as a prerequisite
    of the Multia groups transfer into the PCBU.  At least according to
    what I was told.  <Opinion begins> Obviously, carrying existing
    inventory into the PCBU was a liability, and therefore, evil.
    So the loss is presumably not on the books of 'that evil PCBU'.
    
    	Rick
    	Alpha Migration Tools

    And everybody and their brother is now selling their version of
    UDB as "Java Terminal".  Check out http://www.hds.com/
    
    - Vikas

HP Discontinues Disk-Drive Manufacturing; Overall Company Order Growth Slows

July 10, 1996, 4:42 PM EDT

PALO ALTO, Calif.----July 10, 1996-- Hewlett-Packard Company (NYSE:HWP) 
today announced that it will discontinue manufacturing disk-drive
mechanisms in order to focus on the extended-storage market, including tape
drives, libraries and CD-recordable technologies. HP's Disk Memory Division
(DMD) -- located in Boise, Idaho, and Penang, Malaysia -- will cease
operations, resulting in a pre-tax charge against earnings of approximately
$150 million in the company's 1996 fiscal third quarter, which ends July 31.

The company also reported that it has experienced a decline in the rate of
order growth across businesses and geographies during the first two months
of the quarter. The closure of DMD will add to this decline in order growth.
Based on incoming order levels for the first two months of the quarter,
order growth is likely to be significantly below the 24 percent increase HP
reported in the second quarter. Ending Disk-mechanism Manufacturing

"Today's decision will enable us to focus on enhancing our market-leadership
position in tape backup, CD-recordable products, and optical and tape
libraries," said Douglas K. Carnahan, HP senior vice president and general
manager of the Measurement Systems Organization, which includes the Disk
Memory Division. "This action makes sense for HP because our share of the
disk-drive market has been declining in a very tough environment. But I want
to make it clear that we'll continue to support DMD's installed-base
customers."

DMD employs 1,680 people, with 1,150 located in Boise and 530 in Penang.
These employees will receive priority consideration for job openings at HP
operations in Boise and Penang, which are large, multidivision complexes
each with total employment of more than 4,000 people. In addition, HP's
management team is working to move activities from other geographies to
Boise and Penang to provide additional employment opportunities. "HP has a
number of ways to balance its work force, including severance incentives and
relocation benefits, and we have used these successfully in the past when a
business required fewer people," said Carnahan.

The company said the $150 million third-quarter pre-tax charge will be for
inventory and other asset adjustments, as well as for severance incentives
for qualified employees who choose to leave the company. The charges do not
include DMD's anticipated operating losses in the second half of fiscal
1996, the total of which is expected to be comparable to the approximately
$100 million in operating losses incurred in the first half of fiscal 1996.
The second-half losses are expected to be higher in the third quarter than
in the fourth quarter. Order-growth Slowdown

HP noted that order growth has slowed this quarter in many product lines and
most geographies. In addition to disk drives, order growth has slowed in
several areas of the computer business, as well as in a wide range of
measurement businesses, compared with the very strong growth rates seen in
the first half of the fiscal year. Order growth in the Americas and Asia
Pacific is below the outstanding levels achieved in the second quarter and
in the same quarter a year ago.

"We're seeing the effects of customers and channel partners who are
adjusting their inventories and capital spending," said Lewis E. Platt, HP
chairman, president and chief executive officer. "We'll know the exact
impact of these changes on our full-quarter's results in about a month, but
it's clear that this slowdown in order growth, as well as intensifying price
competition, will hurt our revenue growth and profitability. We're already
taking action on discretionary spending across the company, and we're
evaluating our future spending plans in light of the changing demand
environment. "We don't know yet whether the forces that are affecting our
order growth represent a fundamental shift in the business climate or more
seasonal, transitory fluctuations in demand," said Platt. "What we do know
is that HP's businesses remain very sound fundamentally, and that we'll
continue to make appropriate investments to support growth opportunities."

The company will report its results for the third quarter during the week of
Aug. 12, 1996.

Hewlett-Packard Company is a leading global manufacturer of computing,
communications and measurement products and services recognized for
excellence in quality and support. HP has 108,300 employees and had revenue
of $31.5 billion in its 1995 fiscal year.

    re-1
    
      Someone probably just pointing out that even the companies doing well
    aren't immune to laying off.
    
    re .126
    
      Yes digital was wise to sell the disk business to quantum.  Digital
    SHOULDN'T have sold the tape business though.  That tape business is
    helping hold quantum afloat with big profit margins from that business.
    
      As most know, the quantum disk business shut down in colorado &
    penang do to huge infrastructure, & other "manufacturing waste" which
    = losses. 

The Digital approach would be to simply kick the people out the door, 
prohibit internal transfers, etc.

H-P approach is to actively try to find jobs for their people within the 
company.

Do you believe that the people in Digital or H-P are better motivated to 
help their company?  

Which company has the more competent upper management?

john

          This all reminds me of a conversation I was having with someone
    at my 2nd job. Well ya know we have fallen off the inflation curve the
    last 5 years so a 2nd job is necessary!!
    
          Well the converation was directed at Digital and a corrolary was
    drawn to Chryco back in their troubled days. The distinction was that
    Lee I. met with Engineering types and Assembly line workers to avoid
    getting filtered/sanitized information. Talk about making employees
    feel their ideas and problems could be related one on one with the
    CEO!! For Chryco at least from the conversation I had this is where the
    mini-van concept came from.
    
          Even KO at least had a perception that management by walking
    around was far better than being isolated from the worker bees. Had 
    he not been so set in some of his ways this'd be a different company
    today.
    
    Bob
    

    
    	RE: MBWA
    
    	There was a Dilbert strip on this subject ... I think someone
    	here has it posted on a wall, so if I see it I can get the ex-
    	act wording, but:
    
    	Boss: I heard about this MBWA thing, and I tried it ... but it
    	      doesn't seem to make me feel any better.
    

re: .146 

It's more like this.
   
    	Boss: I heard about this MBWA thing, so I took a walk over to 
	      the park and back.  But things don't seem any better around here.

re: .147 (re: .146) 

It's exactly like this (see page 312 of "The Dilbert Principle"):

	Panel 1: [Dilbert is at left working at his desk. Boss has 
		  entered, sweating, from the right and talks to 
		  Dilbert's back.]

		Boss: MY NEW STYLE OF MANAGEMENT IS EXHAUSTING ME.

	Panel 2: [Dilbert has turned to look at boss]

		Boss: I HEARD SOME PEOPLE TALKING ABOUT "MBWA" OR 
		"MANAGEMENT BY WALKING AROUND."

	Panel 3: [Boss faces off-frame to the right with fists on hips.
		  Dilbert stares blankly at audience.]

		Boss: I WALKED ALL THE WAY TO THE PARK AND BACK.  BUT I 
		CAN'T SAY THAT I SEE MUCH IMPROVEMENT AROUND HERE.

The strip appears to be dated 1-16 and Copyright 1993.

[For the lack of a better place to put this...]

Digital has entered into an agreement with EDS for the maintainance of the
DECnet products (DECnet/VAX, DECnet/OSI for OpenVMS, and DECnet/OSI for
Digital UNIX), X.25, and OpenVMS DECwindows.

EDS will make offers to some of the persons affected.  Those who do not
receive offers or decline will be able to find other positions within
Digital.  This is *not* supposed to result in a headcount reduction.

    
    
    and the source of this information is ....?

> Digital has entered into an agreement with EDS for the maintainance of the
> DECnet products (DECnet/VAX, DECnet/OSI for OpenVMS, and DECnet/OSI for
> Digital UNIX), X.25, and OpenVMS DECwindows.

Does that mean DECnet will now be called EDSnet?

Ram ;-)

It will not be called EDSnet; Digital is still responsible for the marketing (or
lack thereof) and sales.  The only thing being outsourced is maintanence.

I for one will refrain from judging good or bad on this until I see more details
from EDS - it may well be that they provide a better working environment than
Digital has the last few years.  Certainly the fact that the people from EDS
were willing to buy a beer for the potential "transferee's" at the local pub,
bodes well for them (and they'll probably be able to expense that as well).

Forgive me if I'm a little strange (or at least stranger than usual).  I'm
personally still trying to evaluate all of this.

--Scott

    and the sale of the maintanence?

After a few glasses of wine, and some reflection on what was said at our
meeting; I offer this warning or advice to all those other groups that do
software within Digital:

If your product does not have the string "NT" in its name, you should also be
expecting to be outsourced in the not too distant future (assuming you aren't
expecting this already).

This may not be a bad thing; change is painful sometimes, but not always bad. 
In the case of DECnet and DECwindows, management seems to have a sincere concern
with regard to the potential impact on the employee - something we've seen all
too little of as late, though it's still to early in this case to say if this
concern is genuine or mere lip service - I hope it's genuine.

fwiw,
--Scott

    I assume this applies to the Engineering side of DECnet, in a manner
    similar to that of the Computer Associates assumption of most of the
    Ploycenter suite of products.  If that is the case, the customer support
    effort will probably remain with Digital MCS, and the change may well be
    invisible to the customer.  We seem to be getting more and more into
    this mode.

>I assume this applies to the Engineering side of DECnet

As far as I've heard, that is the case.  DECnet and DECnet/OSI (or DECnet-Plus)
has generally been considered to be in "maintenance mode" for some time now;
thus the statement that "maintenance is being outsourced" would apply only to
engineering; "support" is different from maintenance (at least in my mind).

Whether or not the change will be invisable to the customer remains to be seen;
though EDS seems to have a good track record in this respect.

>the customer support effort will probably remain with Digital MCS

However, it would not surprise me in the least to see support outsourced to
another vendor; EDS might be a reasonable choice in this regard, and would
certainly fit in with the strategy/advantages for the engineering outsourcing
which were outlined in our meeting.  Do not, under any circumstances, consider
your position secure.  EDS from what I've seen, may well be able to provide
better support than we can.

It appears that we missed one of the core items that Digital does well.

Just my 2 bits,
--Scott

re Note 4690.149 by netrix.lkg.dec.com::thomas:

> Digital has entered into an agreement with EDS for the maintainance of the
> DECnet products (DECnet/VAX, DECnet/OSI for OpenVMS, and DECnet/OSI for
> Digital UNIX), X.25, and OpenVMS DECwindows.
  
        Can OpenVMS be far behind?

        Bob

    Words fail me in trying to describe the stupidity of this move.
    
    A thousand points of contact loom.

    re .154
    
>This may not be a bad thing; change is painful sometimes, but not always bad. 
>In the case of DECnet and DECwindows, management seems to have a sincere concern
>with regard to the potential impact on the employee - something we've seen all
>too little of as late, though it's still to early in this case to say if this
>concern is genuine or mere lip service - I hope it's genuine.
    
    If EDS can provide a stable / supportive / attractive work place for
    the individuals who support these products, and if the engineering
    support continues through the natural life of these products without
    major jolks or interruptions, then is appears to me to be a potentially
    more attractive option for both the people and the products than the
    alternatives of 'demise by a thousand cuts'.
    
    Re .-1 
>Words fail me in trying to describe the stupidity of this move.
    
    Suprising comment... use of outsourcing and use of contractors both
    stem from the same thinking, so I'd have imagined those in favour of
    using contractors would see the logic?
    
    Bob

    
    At least contractors are still within the same organisation and not
    dispersed all over the place, thus making our maintenance organisation
    even more difficult to keep track of.

    EDS has done a fine job with DECset - they gave it the attention we
    were unwilling to provide.  
    
    				Steve

>>    EDS has done a fine job with DECset - they gave it the attention we
>>    were unwilling to provide.  

As long as "we" does not include the engineers assigned to the product.  Very
few of them thought they were working on a "dead product".

bjm

not "dead," the word is "mature."  Fully developed, perfected, etc.

    re .163
    
    Please don't write such things when I am drinking tea.

    
    Digital sold the IBM Interconnect group to EDS back in January 1995,
    from my contact with the engineers that went to EDS I can tell you
    that they are happy with what EDS is doing.  

Re: .162

By "we" I meant the management who held the purse strings and starved the
DECset group for years.

				Steve

    > If your product does not have the string "NT" in its name, you should
    > also be expecting to be outsourced in the not too distant future 
    > (assuming you aren't expecting this already).
    
    Maybe the should have renamed it decNeT?  :-)
    
    -Mark

	I understand the need for VMS to focus on what is driving 
	it's future -Windows NT Affinity based on TCP/IP(v6)- and
	also it's dilema that it can not cut the products the 
	existing customers have invested infastructure in.  I also
	think EDS will do a fine job of maintaining the software we
	depend on.  

	Yet I fail to see how taking roughly the same engineers/supervisors
	shipping them off to EDS where they will receive roughly
	the same salary/benefits and adding management to 
	'manage the relationship' saves digital money.  Obviously EDS
	is making some sort of profit on this relationship as well.
	It's almost as if we are throwing money at problems just to
	make the headcount number to satisfy some beancounter in 
	Maynard.

  I'll bet that stripped of Digital's corporate horse**** and
  obstructionism, it's quite possible that EDS can make a
  profit on the same effort and still only cost Digital
  what we're now spending.

  Beancounters *COST* beans. VPs *COST* beans. Administrivia
  like $25 or $500 PAK fees *COST* money. ...

                                   Atlant

The purpose of the outsourcing was not to save Digital money (at least that's my
understanding); the purpose is to allow Digital to focus its efforts on new
technology (read NT and IPV6).

Unfortunately, this outsourcing did not address, in my opinion, the underlying
problem - Digital's lack of ability to market or sell a product.  EDS is
providing maintenance service only - from what I understand, they are not
allowed to market/sell it themselves; I think this is unfortunate, because I
think that with a good strategy/vision, and some good marketing and advertising,
the product could be grown - especially if we were to make it available on other
hardware and OS platforms.  This may not be overly limiting though as EDS may
aquire a group of individuals that have a skill set which has value beyond
simply maintaining code.  Skills which could potentially be put to good use for
doing consulting or other value-added services which EDS sells directly to other
customers (Digital included).

Truely I'm quite surprised to see this attitude from people that think Digital
did a bad thing here - isn't this the same conference which not so long ago
vilified DECnet/OSI (and yes, DECnet too) as being the source of all of
Digital's problems?  :-)

    Hi Scott, long time, no note. 
    
    As I've tried to indicate before, I believe this move is not good
    because it makes the process of fixing problems less simple. The more
    diversified (read: sold off) the product set becomes, the more
    difficult it will be to get things fixed in a timely manner.
    
    In my not-so-humble opinion, of course.
    
    /Andy

Ah, the days of VOTS and Andy Leslie....  What memories!

I don't know that I can prove you wrong;  All I can do is point to other
products which have been outsourced to EDS (DECset and IBM Interconnect) and say
that it looks like it worked pretty well.  I'm sure there are bound to be some
bumps, but, there were bumps here in Digital too.

When you think about it, this might not be a bad strategy for Digital in
general; develop new technology; grow a product to "maturity" and then outsource
it to someone to maintain.  Keep Digital's focus on that new technology area,
the cutting edge.

Just sliding down the razor blade of life,
--Scott

>>    Maybe the should have renamed it decNeT?  :-)

No, you need to put the N next to the T by swapping the N with the adjacent E. 
Then it would certainly be a decent product.  :-)

						Brian

>>though it's hard to
>>interpret the statement "offers will be made to selected individuals")

What's so hard about that?  Make offers to the ones rated #1, #2, fill the rest
with the people within EDS that may want to work on the products.  Seems like
the only way I'd sign an agreement if I was EDS.

I'm not saying there is dead weight on the projects - but if there were I sure
would not want them forced on my company.  And besides - they may have their
own "kitting" people so they don't need any more.

bjm

    
    
    	Ahem.
    
    	As the adminstrator of one of the groups directly affected by
    	this, I take offense to the "dead weight" comment.  No one here
    	is dead weight.  And lots of people are still confused and somewhat
    	shocked at this turn of events.  The decision to outsource 
    	the DECwindows end of it was not handled well at all.  I'm not
    	sure what of the info we were told at our staff meeting today is
    	confidential or not, so I won't elaborate on that point.  EDS
    	will be here in the coming weeks, talking to the engineers
    	currently working on DECwindows.  My mgmt. seems to think that EDS
    	is getting more than they bargained for.  They don't even know
    	what all of DECwindows entails.  Those engineers that wish to 
    	continue on the project will have the opportunity to go to work
    	for EDS.  Those that wish to stay with Digital will move into
    	new positions for a newly-formed project (same group) or may
    	look for other jobs within our organization.  UEG is working
    	very hard to make sure it's people are taken care of (my group
    	is part of the UNIX organization but was financed by VMS to work
    	on DECwindows products).  All in all, I get the feeling that my
    	management feels this is a good move for the project.  
    
    	JJ
    
    	

Judy,
	I didn't say any group effected had dead weight - I am saying that
if I was EDS - I would want the option to refuse to hire anyone (ie not 
extending them an offer).
	Make simple business sense to me.

	I have talked to one of the effected people and their point of view 
is that the DECwindows portion of the deal was "an add on" to go along with 
the DECnet project.  I can believe that.  They also agree that it was not 
handled in the best possible manner.

Brian J.

>fill the rest with the people within EDS that may want to work on the products.

Like the people within EDS would even have a clue as to what they were doing. 
In my opinion, it's to EDS's advantage to hire as many people that are willing
to transfer as possible.  You don't find OSI expertise just walking around on
the street (slithering maybe, but not walking) - obviously I cannot speak to
DECwindows or other groups.

--Sssssscott

    "You don't find OSI expertise just walking down the streets..."
    
    That's part of the problem. Even though OSI and its associated stuff
    solves problems that the IP world have been trying to ignore,
    surprisingly few people seem to be using it, on Digital or elsewhere
    (how many OSI stacks can you get for NT?). _Maybe_, just _maybe_, this
    is a sensible move. I hope the customer info package will make all the
    relevant points.
    
    [I remember MAP and TOP. My previous employers bet the boat on MAP. I
    left before it sank...]
    
    I'll refrain from commenting on NCL.
    
    regards
    john

>    I'll refrain from commenting on NCL.
    
    I won't. It belongs in a bucket. Architecturally pure it may be, but
    usuable it ain't.
    

Re .182

So, what's your point?  It doesn't really matter who or how many customers are
using DECnet and DECnet/OSI and all of the other products going along with this
move; I just feel it will be to EDS's advantage to hire as many as they can of
the current engineering teams involved (obvious I guess);  really, EDS's success
or failure in hiring existing engineers will probably dictate how successful the
overall transition will be.  For those that get offers from EDS, this might be a
good chance to get that raise you've been waiting for from Digital, or an
increase in that bonus  ;-)

--Scott

    Re: .181, .182 
    
    FWIW, the EDS consulting practice has been trying to buildup DECnet
    and X (yes, even DECwindows) expertise for quite some time.  This
    sounds like a way for them to fill the back office with exactly that
    expertise and get some offsetting revenue at the same time.  I suspect
    that powers at EDS look at this as a WIN.
    
    	Bill

> I suspect that powers at EDS look at this as a WIN.

	Of course!  What kind of company would enter in to a contract
	that wasn't in it's best interest!  Er, let me ask that 
	differently.... Um... er...

EDS absolutely looks at this as a win.  As a matter of fact, most of their
business is based upon outsourcing.

They currently have 90,000 employees.  50% were obtained through outsourcing
agreements such as this one.  Current total is 400 outsources, 134 of which 
have been done since 1994.

//steve

> What kind of company...
>  Er, let me ask that differently

	as in, "Name two!" ?

    
    >Like the people within EDS would even have a clue as to what they were
    >doing
     
    EDS has a support team for DECnet/OSI and X.25 and has been pulling
    business away from Digitals Customer Support Center for some time.  I
    know this for a fact because my girlfriends company USED to have a
    contract with us and goes to EDS for their X.25 support.
    
    Many people that support a product are familar with programming also. 
    It would not be that difficult to transfer people from the support
    teams to the engineering teams to fill the remaining slots.
    
    BTW, rumor has it that 30 out of 40 potential DEC employees were asked
    to move to EDS.
    
    Marc
    

    
     I don't want to get knee-deep in this one. Just add my comment.
    
     This is not a good idea to me.
    
     Thank you.
    
     Have a wonderful day,
    
     Bob

If this is good for DEC from a cost savings point of view, then I say do it.
Most customers I have been working with are pulling the plug on all network
protocols except one.

Anybody want to guess which one it is?

    > Anybody want to guess which one it is?
    
    Two cans and a string?

>    Many people that support a product are familar with programming also. 
>    It would not be that difficult to transfer people from the support
>    teams to the engineering teams to fill the remaining slots.
    
    It's true that within Digital (some) CSC people have access to
    the product sources and do get to know the products very well - in fact
    I know people who have moved from the CSC to an engineering group.
    
    However, outside support people would generally not have had any
    exposure to the sources and, except for a very small number, would not
    be familiar with BLISS.
    
    Without an experienced hand to guide them, I would expect coming up to
    speed would take a long time indeed. It would make sense for EDS to
    keep a significant number of the existing engineers, particularly if
    they (EDS) are contractually obliged to fix some percentage of bugs
    within a given timescale (so that they cannot afford a long learning
    curve).
    
    Antonio
    

>>    the product sources and do get to know the products very well - in fact
>>    I know people who have moved from the CSC to an engineering group.
    
    You sound surprised? Many of us (eg myself) CAME from an engineering
    function to join the CSC.
    
    I was also recently irritated by someone who described their early
    Digital career as "when I was a mere CSC hack", as if CSC is something
    you do while you're still wet behind the ears and later, if you're good
    enough, you get to do a REAL job!
    
    bah!
    
    Tony I (UK CSC, Not really very angry but just a bit niggled!)
            

>    You sound surprised? Many of us (eg myself) CAME from an engineering
>    function to join the CSC.

I didn't mean to sound surprised, honest! I realise that Digital has let people
move around between the various functions.

My point was (and still is) that if you've never seen the DECnet-Plus code and
you suddenly get told to fix it you are going to have a fairly steep learning
curve to climb. You need BLISS (and C and MACRO), you need to know enough OSI
(or WAN or X.25 etc.) for your particular bit and some design specs etc. would
be useful too. You don't necessarily need to acquire any of this knowledge to
support the product effectively. And if you are not part of Digital, some of
this knowledge is going to be pretty hard to acquire.

Antonio

> You need BLISS (and C and MACRO), you need to know enough OSI

Being familiar with the language the product is coded in is the tip of
the iceberg.  Much more critical is an understanding of the design, the
algorithms, the tradeoffs and their rationale.

Ram

re: 196

As an engineer who has worked on DECnet-Plus for 5 years, I would
say that if EDS does not get a transfer of engineering expertise
(read - hire most or all of the DECnet engineers) then it will
be a big problem for them. It takes a large amount of ramp up time
for a new engineer to work on DECnet, due to the size of the code
base and the complexity. I have trained engineers in the group and
have seen this over and over. 

As Antonio said, call center support on the product is VERY different 
than engineering (or what has been referred to as "maintenance" of a 
mature product). If EDS had developed CSC-like expertise, fine for
them. I wish them good luck if they don't manage to transfer the 
engineering expertise that exists today - they will need it. 

And btw, there is no dead weight in the group. The DECnet group has
suffered tremendous attrition the past few years for a number of 
reasons. What is left is a dedicated group of people that know the
code and like working with the technology, despite all the brickbats
that they have gotten.  

I worked in the IBM interconnect group as well (for 6 years) and
the product set and engineering skills needed for that xfer to EDS
are very different. I think it is comparing apples to oranges if 
you say that IBM I/C was successfully moved over, so therefore DECnet
will be too.

My 2 cents. 

I found another job and submitted my resignation before this announcement 
took place, so I have no personal stake in this. I'm going to Process 
Software in Framingham, and will be working on TCP/IP.
 

Cathy

>    BTW, rumor has it that 30 out of 40 potential DEC employees were asked
>    to move to EDS.

As far as I know, EDS has not made any offers to anyone at all yet.  the
interview process doesn't even start until next week.

    
    Hi Cathy!
    
    I didn't even broach the subject of whether the transfer of the
    IBM Interconnect group was successful, all I stated was that the
    engineers seem to be happy.  This is relative to where things were
    going in that group prior to EDS.  There has been no cost-savings
    for DEC in that transfer.  EDS didn't get many engineers to transfer
    over and so they are struggling...
    
    Dana