Conference 7.286::digital

1758.0. "Leaked memo appears in Wall Street Journal" by SDSVAX::SWEENEY (Patrick Sweeney in New York) Fri Feb 07 1992 09:00

    A memo leaked to the Wall Street Journal and Boston Globe forms the
    basis for this story.
    
    
Copyright � Dow Jones & Co. 1992
Source: Dow Jones News Service
Headline: Digital - Spending Cuts -2-: Cuts In Engineering, Research
Time: Feb 07 1992 0818


Story: 
           By John R. Wilke 
           Dow Jones Staff Reporter 
 
  BOSTON -DJ- Digital Equipment Corp. plans to cut spending on engineering and 
research by $400 million, or as much as 20 pc to 25 pc, Digital insiders said. 
  The new round of cost-cutting and a sweeping reorganization were outlined 
Jan. 14 in a forceful, urgent presentation to senior executives by Digital's 
president, Kenneth H. Olsen, said people who attended the meeting. 
  Olsen's plans follow news of an unexpectedly steep loss for the fiscal 
second quarter, ended Dec. 31, the first operating loss in the company's 
35-year history. 
  A memo that summarizes Olsen's remarks has been circulating within the 
company and was obtained by The Wall Street Journal. It says that Olsen 
intends to streamline product packaging and engineering and kill off what he 
called ''perpetual projects'' that divert precious engineering funds to a few 
small-volume products. 
  The move is likely to be welcomed by investors.  A senior manager who 
attended the luncheon meeting at the company's headquarters quoted Olsen as 
saying that ''big companies like Digital can't expect to compete in every 
niche.'' 
  It wasn't clear whether all the $400 million in cuts sought by Olsen would 
come from Digital's $1.6 billion research budget. Some of it apparently will 
come from the amount spent by the company on manufacturing engineering, a 
figure that Digital doesn't disclose. 
  Still, a large cut in research spending would be painful for Digital.  
According to Inside R&D, published by Technical Insights Inc. of Englewood, 
N.J., Digital ranked fifth in 1990 in research spending by the largest U.S. 
corporations, after General Motors Corp., International Business Machines 
Corp., Ford Motor Co. and American Telephone & Telegraph Co. Moreover, as a 
proportion of revenue, Digital's $1.6 billion research budget - at 12.5 pc of 
its calendar 1990 revenue - far exceeded that of GM, Ford, IBM or AT&T. 
                   -V- 
  For complete article, see today's edition of The Wall Street Journal. 
   8:18 AM
categoryIndustry I/CPR
categoryMarketSector M/TEC
categoryGeographic R/MA R/NME R/US
categoryCompany DEC

    yes, but was the memo repeating rumour or fact?

    It's absolute fact...I've got a copy.

    As of 1 PM, Digital hasn't issued a external clarification that's been
    forwarded to subscribers of the Dow Jones News Service or an internal
    clarification on Livewire.  Mark Steinkrauss, director of investor
    relations, is briefly quoted in article published: "Digital already has
    in place initiatives that will save $1 billion in annual expenses in
    future years.  Digital has taken a total of $1.65 billion in
    restructuring charges over the past two years to cover the cost of
    plant, closings, product consolidations, and work force reductions"

    The bottom line is that Digital appears neither to confirm nor deny the
    specific details of the story published in today's Wall Street Journal.

    Hey, the new Org Chart shows KO as President and Smith as COO.  I
    doubt very much that he's gonna start running marketing.
    
    To tell the truth, I wouldn't mind seeing Sculley on the chart...high
    up.

    >    To tell the truth, I wouldn't mind seeing Sculley on the
    >chart...high
    >    up.
    
    	If Sculley were such a wizard, he would have licensed the Mac
    interface in '88!

    Article in Philadelphia Inquirer "Struggling Digital Equipment
    Corporation plans massive layoffs ." The article goes on to expound
    that all areas of the company are not safe and it will start from
    top down. Highest paid jobs are the first to go. Keep your fingers
    crossed, and here we go again.
    

    Don't forget the acquisitions.

    "The company has cut 12,450 jobs..."
    
    From 1991 annual report: Employees....... 		  121,000
                                     
    From Q3 results:
    TOTAL EMPLOYEE POPULATION APPROXIMATELY..             119,500
    
    Somebody's math is wrong here.

>    "The company has cut 12,450 jobs..."
>    Somebody's math is wrong here.
    
    Also added jobs, also acquired two companies.

    fasten your seatbelts and stay tuned....
    

    Ken running Marketing.. there's a scary thought.  In my hearing he
    stated vociferously that Multi-Media would never go anywhere (ask SUN
    and the FROX TV folks) and that a VT terminal and a good Word
    Processing program is what the world wants.
    
    karl