Conference 7.286::digital

    Is it later than usual this year?
    Is there forecasts of a bad result driving the shares down?

    European results were announced (by Poulsen?) a few weeks ago. Posted a
    $100M operating profit, based in part on a $200M cost reduction. Can't
    continue to make a profit that way, so something has to change.
    
    

    " Can't continue to make a profit that way, so something has to
    change."
    
    Profit =  Income - expenses
    
    1 If (income.le.0) then goto 2
      If (profit.lt.0) CALL Reduce_expenses(headcount,spending,etc)
      Wait (3 months)
      goto 1
    2 call exit(chapter=11)
    
             

This is only slightly related, but I just heard that IBM has
declared an $8B (that is 8 billion dollars!) second quarter
loss, most of it in restructuring charges. There planned
layoffs for CY 1993 are around 50,000 and for CY94 around
35000

Jay

    
    Re .4
    
    Those results must be in line with WS expecations.
    At 11:15  IBM was +3 and DEC was +1.

    It's 85 cents / share profit. And now over to the market...

    Not really, there was an investment analyst which published on July
    19th Boston Globe that we should be showing anywhere from $ 1.00EPS to
    $ 1.25 EPS.   I then placed a note in the Digital Investing Notesfiles
    saying that Wall Street (here we go again) will view it as negative if
    we show less than that forecast (which we did).   I do not expect the
    stock to move up, in fact, will be extremly surprised if it does.
    If you read between the lines the press release it says, watch out for
    Qtr. 1, Europe is extremly weak and we are not doing so great here in
    the US.    Again as I argued then, we have to demonstrate a consistent
    quarter to quarter trend, then our stock will start to move.

    RE:  .6
    
    >>I really can't understand Wall street Analysts' logic.  We show a
    >>profit, they get their prediction wrong - our share price goes down!!!!
              ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    
    Wrong.  *We* got the prediction wrong--translated, it means that we
    don't have a good handle on the business.  WS expects you to meet your
    predictions.  Don't exceed, don't fall below.  
    
    Chet

    re: .8
    where/when dir *WE* (digital) say we would make more than X per share
    for the 4th quarter???

    The predictions of Wall St analysts ranged from 40 Cents to $1.25. IT
    appears the market prefered to hear $1.25 a share.
    
                    <<< Note 2501.50 by LNDRFR::ADOERFER >>>
                            -< HP-DEC  projections >-

(From Dow Jones News Service)

No. 2 computer maker Digital Equipment Corp. (DEC) appears to be turning
around ahead of IBM.

Analysts say Digital is likely to report its first profit in eight quarters
for the June period, its fiscal fourth quarter. Shao Wang, an analyst with
Smith Barney Harris Upham & Co., expects earnings per share of $1 to $1.25,
compared to a net loss of $1.85 billion, or $14.76 a share, after a $1.5
billion restructuring charge.

''They've done a good job cutting costs,'' Wang says. ''The real story here
is revenue.'' He predicts revenue for the quarter will rise to $3.96 billion
from $3.91 billion a year ago.

Other analysts are less optimistic, with some estimates of quarterly
earnings as low as 40 cents a share.

Stevens of Dean Witter recently cut his earnings estimate for the quarter to
99 cents a share from $1.19 and expects revenue to be down to $3.8 billion.
Stevens expects Digital to stay in the black and be profitable in every
quarter of fiscal 1994.

Hewlett-Packard Co. (HWP), whose fiscal third quarter ends July 31, is
likely to continue to report robust growth. But even Hewlett has recently
disappointed investors.

Last month, the company said European weakness had led to order growth
slowing to under 20% from 25% in the previous quarter, foreshadowing a
possible sequential decline in sales.

Still, Wang of Smith Barney says, ''it remains the admired exception'' to
the industry malaise.

For Hewlett's fiscal third quarter, Wang predicts net will rise 71% to $1.30
a share from $191 million or 76 cents a share in the same period last year.
Other analysts are closer to $1.15 a share.

Wang predicts Hewlett's sales will rise 20% to $4.8 billion. Such sales
growth could catapult it past Digital to the No. 2 spot in computer industry
revenue, after excluding about 18% of revenues coming from medical products
and instruments.


    

    re: .10
    
    After Wang predicted earnings per share around $1 to $1.25:
    
>''They've done a good job cutting costs,'' Wang says. ''The real story here
>is revenue.'' He predicts revenue for the quarter will rise to $3.96 billion
>from $3.91 billion a year ago.

>Stevens of Dean Witter recently cut his earnings estimate for the quarter to
>99 cents a share from $1.19 and expects revenue to be down to $3.8 billion.
>Stevens expects Digital to stay in the black and be profitable in every
>quarter of fiscal 1994.

    Revenues were $3,913,951,000 according to the LIVE WIRE report.  Yet,
    earnings were only $.85 per share and not $1 to $1.25 the analysts
    expected.  Analyst projections for our earnings were pretty much on 
    target.  But, their projections for earnings per share were met with
    disappointment.  Looks to me like shareholders can expect net earnings 
    to stay flat.  If earnings per share is to go up (to please 
    shareholders), Digital will have to cut expenses even more.  
    
    Steve 

>    If earnings per share is to go up (to please 
>    shareholders), Digital will have to cut expenses even more.  
 
	This misses the other possibility - increase revenues.

	I think that's the source of disappointment by Wall Street. Yes,
	we're doing well at cutting costs. But our revenues were up only $8
	million (0.2%) over the same period last year.

	Roy

>>    If earnings per share is to go up (to please 
>>    shareholders), Digital will have to cut expenses even more.  
> 
>	This misses the other possibility - increase revenues.

	Yes, but increasing revenue is hard. Cutting people is easy. Not 
	only that but all managers have people to cut but they can't all
	directly sell something.

			Alfred

    Yes, I'm missing the other possibility of increased revenues.  
    Frankly, I think it's a pretty safe bet that our revenues will 
    remain relatively flat with slow growth at best.  
    
    Steve

    You're overlooking the other possibility -- that revenues could
    decrease significantly as hardware continues to drop in price.  We're
    still trying to save our way into prosperity.  Tain't gonna happen. 
    

    Well, now, I'd rather not be "doom and gloom" about this ... ;^)
    
    Steve

    Brad Allen of DEC's investor group was saying that in terms of
    expenses we had an extra week but not nessarrily the sales to go
    with it because this Q4 was 14-weeks rather than the normal 13 weeks.
    Not sure if would make the .15 cents to at least get to a $1.00/share
    though.
    
    Chet had it right, Wall Street expects companies to be right on--not
    to exceed forecast nor to come in under.
    
    The Investor Group does a great deal of briefing of the anaylsts just
    as the Products Group do for the Industry Consultants, so when the
    Financial Analyst are off it is because of Digital's forecast,
    primarily.
    
    It feels good be black.
    
    My .02,
    
    Edwin

    re: .17
    
    >Chet had it right, Wall Street expects companies to be right on--not
    >to exceed forecast nor to come in under
    
    is that why we hold shipments on the dock's at the end of a quarter...
    we don't want to exceed our forcast and make the street unhappy with
    us...!!!

    Ken Olsen had it right--Wall Street is focused on "short-term" to
    more than survive a comapny needs a longer term vision.
    
    There are many legitimate reasons to holds shipments on the dock--one
    may be the Customer may not be ready to receive it. Others, I am
    unable to speak to.
    
    Edwin