For Digital, a tunnel at the end of the light
Article Abstract:
DEC announces on Jul 2, 1996, that its quarterly results will be below expectations, attributing the performance to poor sales in Europe, unfavorable exchange rates and persistent troubles in the company's PC unit. The company will also take a $475 million restructuring cost, chiefly to pay for cutting 7,000 jobs. The news marks the second consecutive quarter in which DEC's earnings have not met projected levels. DEC CEO Robert B. Palmer says that the company, which lost billions in the 1980s and early 1990s, continues to recover, pointing out that DEC made $800 million in gross profit between 1994 and 1996. Analysts agree that the company has a sound strategy, which focuses on the strengths of the Alpha chip, a microprocessor that has the most raw calculating power of any on the market. However, DEC has been unable to execute its strategy. The PC unit has been in trouble since early 1995, and Palmer has taken over management of that unit, planning to restore it to profitability by Dec 1996.
Publication Name: The New York Times
Subject: Business, general
ISSN: 0362-4331
Year: 1996
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Digital is seen hiring I.B.M. PC executive; company seeks to move to top of the industry
Article Abstract:
Observers believe that Bruce L. Claflin's resignation from IBM after 22 years with the company signals his intention to join DEC as head of that company's PC division, although neither Claflin nor DEC would comment. DEC's PC business ranks 11th in the world, despite its rapid growth and the company's determination to become one of the top ten computer vendors. In the summer of 1995, sales growth in the PC div fell to 20%, below the industry average of 22%, prompting the resignation of Bernhard Auer, former head of the division. DEC PC sales have since increased as the company targets the home market and enlarges its retail presence. For the quarter ending Sep 30, 1995, PC sales rose 32% over the same quarter in 1994, and the division should break even for 4th qtr 1995 with profits returning in 1st qtr 1996. Observers state that DEC plans more reductions in the price of home computers and the introduction of three new multimedia systems.
Publication Name: The New York Times
Subject: Business, general
ISSN: 0362-4331
Year: 1995
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Digital stock up as earnings rise despite slump for PC's
Article Abstract:
DEC's net income for 3rd qtr FY 1996 reached $124 million, and the company's gross profit margin rose 2.4% to 34.6% despite slow PC sales. The net income was generated by $3.62 billion in revenues, 4% higher than the $3.47 billion in revenues earned in 3rd qtr FY 1995. DEC attributed its results to strong sales in servers, storage devices and networking equipment. DEC also has reselling agreements with major software vendors including an agreement with Microsoft to sell Windows NT. For the quarter, sales of Windows NT were 115% higher than in the same period in 1995, while sales of Alpha-based systems were up 60%. Revenues from storage devices and networking equipment grew 50%. The PC division, which generates roughly 15% of the company's income, saw revenues fall 10%. DEC expects the division to return to profitability by the end of 1996. DEC's stock rose $5.25 to close at $60.625 on Apr 23, 1996 on the strength of the report.
Publication Name: The New York Times
Subject: Business, general
ISSN: 0362-4331
Year: 1996
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