Conference 7.286::digital

    Quarterly results (not the year-ending quarter, of course) are usually
    made public on the third Thursday following the close, if memory serves
    me right.
    
    Chuck

    Word is Tuesday October 24.
    
    Mav

|    Word is Tuesday October 24.

           4 weeks seems long... must take that long to make sure they
           get the right numbers, I mean get the the numbers right :-)
           
           Steve

    they used to publish within a couple weeks but have recently changed 
    the reporting procedures, so now...
    
    Chip

    I heard the BOD is not meeting until the 19th, results will be
    published sometime after....
    
    KOf

    This really frosts my butt!  This company can report it's Q1 numbers,
    but CANNOT report my sales performance for Q1?  But still expect me to
    keep selling and hoping that by January 97 that I'll have enough sold
    to make my 7.2M quota.
    
    Yea, give me a 7.2M quota and then give me 6 months to track all the
    paperwork from the first half of the year for crediting ... something
    is severely wrong here.
    
    You think BP still reads this notes file?

    Kinda carried away ... I meant January 96   :-(
    
    Feels like 97 ....

I have it on good authority that BP's staff does read this file and passes on
to him notes which they think he should see - Bob himself does look in on 
occasion, but not regularly.

					Steve

    
    	Hey, BOB -
    
    	Read .6 say 100 times between now and breakfast. Then take a look
    at how many DEC100 and Decathlon reps have left Digital in the past
    three years. Take a real deep breath, and DO SOMETHING.
    
    
    	***NOW***
    
    
    
    		the Greyhawk

This is from CNN interactive about other high-tech firms...namely IBM, Sun,
and Microsoft.  

October 17, 1995
Web posted at: 9:45 p.m. EDT

Blue chips follow techs higher

NEW YORK (CNN) -- Some upbeat earnings reports helped boost the Dow Jones
Industrial Average 11.56 points to 4795.94 in active trading Tuesday. Several key
members of the technology sector reported strong results and that powered the
NASDAQ composite to 1035.44, a gain of 17.31. Profits at Sun Microsystems more
than doubled, sending its stock up 9 1/4 to 67 7/8 on volume of more than 5 million
shares. The broader S&P 500 index jumped to a new record, 586.78, up 3.75 points.




Microsoft profits lifted by Windows 95

SEATTLE (CNN) -- After the close of trading Tuesday, Microsoft announced its
profits bounded 58 percent in its fiscal first quarter. The software giant earned $499
million, compared to $316 million a year ago. Revenues rose 62 percent. Microsoft's
earnings outstripped the consensus projections handily. In anticipation of the report,
Microsoft shares rose 4 3/8 to 91 1/8.



IBM reports third quarter loss

NEW YORK (CNN) -- IBM lost $543 million in the third quarter, its first loss in
two years, but the red ink includes a $1.8 billion charge related to its recent acquisition
of Lotus Development. Before that charge, IBM profits rose $1.3 billion, but that was
still below analyst expectations. Big Blue also said more job cuts are likely during the
next few months. IBM stock fell on the news, but after analysts fully digested the
report it ended the day up 2 7/8 at 96 7/8.


Copyright � 1995 Cable News Network, Inc.
ALL RIGHTS RESERVED.

    I love it...IBM turns in a *loss* and their stock goes up!  Should be
    called "Teflon Computer Systems".

Yes, but look what caused the loss. They absorb 1/4 of the buyout of 
Lotus and still end up with over $6B in the bank

If only we had those losses !!!!

Alan

    re. 11
    
    The IBM loss was not an operating loss.  That is why the stock did not
    drop like a rock.  
    
    There are losses and then there are losses.

    .12
    
    that's what I was going to say. Let's see who the real teflon is.
    

    
    well rest assured, we will have a pretty decent Q1 ourselves. I am
    guessing around $65 to 75 million, which would be around .45 to 46
    cents a share. Not sure what wall strret expects from us, maybe 35
    to 36 cents a share?
    
    Mark

    .15
    
    I think we will out perform what you said.
    

    With the stock shooting up to 54.50 (up 2.25) in just the last 90
    minutes or so, I would think that the market feels that we are going to
    have a very good quarter.

re: 15

I read an article the other day in our local paper (but I believe that it was an AP
article) that was speculating on the quarter expectations of many of the high tech
companies.  It showed that *analysts* predicted Digital's profit for the quarter 
ranging from 0 to 68� per share.

Given Digital's traditional horrible showings in Q1, I'm personally pulling for a
1� per share profit. Anything above that is gravy. :)

- Bryan

    
    .16
    
    I hope you're right. :-)

    The street is calling for .18 cents/share, I feel it will be much
    higher.

I hope you mean 18 cents, not .18 cents.

Paul

           Digital reports first quarter net income of $48 million 
 
         Digital today reported net income of $48 million, or 26 cents per 
   common share, for the first quarter which ended Sept. 30, 1995, 
   compared with a net loss of $131 million, or 98 cents per common share, 
   for the same period last year.
         Total operating revenues for the quarter were $3.271 billion, up 
   five percent from the $3.122 billion reported for the comparable 
   quarter a year ago. Adjusted for divestments, revenue from ongoing 
   businesses grew 11 percent compared with the same period last year.
         Gross margin for the quarter was 32.2 percent, compared with 30.2 
   percent for the comparable period in the prior year. 
         Total operating expenses for the quarter decreased to $991 
   million, down 12 percent from $1.124 billion reported for the same 
   period last year.
         The corporation ended the quarter with approximately 61,500 
   employees -- a reduction of 12,300 positions since the same period last 
   year -- and 200 employees fewer than reported at the end of the 1995 
   fiscal year.  
 
         "Digital continues to move ahead strongly," said Chairman, 
   President, and Chief Executive Officer Robert B. Palmer.  "In a quarter 
   that is historically weak due to seasonal softness in the European 
   markets, we increased overall revenue and showed impressive order rate 
   growth worldwide."
         Adjusting for divestments, Digital recorded strong revenue growth 
   in the Asia/Pacific and Americas regions.  In addition, solid revenue 
   growth was achieved in Europe.
         "Clearly, this is a year of growth for Digital," Palmer added. 
   "As we move forward, our improved financial performance, market-driven 
   organization, partnerships and superior technology will enable us to 
   grow in chosen strategic markets."
         Vincent J. Mullarkey, vice president and chief financial officer, 
   said, "With our fourth consecutive quarter of profit, we have 
   demonstrated further proof that we are solidly on a track to meet our 
   improved profit goals." 
         Product revenues were up 10 percent in the quarter to $1.819 
   billion from $1.653 billion in the first quarter of last year.  
   Adjusted for divestments, product revenue from ongoing businesses was 
   up 22 percent and represents the sixth consecutive quarter of 
   year-over-year product revenue growth.
         "I am encouraged by the 32 percent growth in our personal 
   computer revenue,"  Palmer said.  "We are successfully transitioning 
   the PC business into its next phase, where we plan to continue to 
   capture market share.  During the quarter, we opened new sales 
   channels, including large [U.S.] retailers such as Circuit City and 
   OfficeMax.  We are getting back on track to achieve solid revenue 
   growth and profitability in our PC business this fiscal year."
         The company again recorded strong performance in its 64-bit Alpha 
   systems.  Alpha systems sales grew by approximately 40 percent over the 
   prior year, driven by strong market demand for AlphaServer systems. 
   Digital's VAX system revenue continued to decline as customers 
   transition to Alpha and now represents only five percent of product 
   revenue.  In addition, revenue from the company's other product 
   businesses, including storage subsystems, networks and software, grew 
   by more than 30 percent over last year after adjustment for 
   divestments.
         "We continue to experience solid demand for our AlphaServer 8200 
   and 8400 models, which rapidly are becoming the industry standard for 
   customers who need to run demanding, large commercial and scientific 
   database applications at unprecedented speeds," Palmer said.
         Digital continues to maintain and extend its substantial industry 
   lead in shipping the highest performance 64-bit RISC microprocessors.
         "Our Alpha 21164-300MHz microprocessor, the first in the industry 
   to exceed one billion instructions per second, is beating initial 
   performance estimates and is available in systems today," Palmer said.  
   "Our competitors have yet to ship a microprocessor even remotely 
   competitive as we position ourselves to begin delivering the even 
   higher performance Alpha 21164-333MHz microprocessor in December."
          In September, the company announced a family of seven 
   Intel-based and Alpha personal workstations that provide workstation 
   performance at PC prices.  The personal workstations, exclusively 
   running Microsoft's Windows NT, enable customers who require increased 
   performance to upgrade at low cost from an Intel CISC architecture to 
   the Alpha RISC architecture with only the change of a daughter card.
         The new line is the first major product unveiled following the 
   mid-summer joint Digital and Microsoft announcement of the "Alliance 
   for Enterprise Computing," which answers customer demand for 
   Microsoft-based solutions and support in enterprise-wide computing. 
         "The new family of personal workstations is a perfect example of 
   the alliance, our dual Intel and Alpha platform strategy, and the new 
   Digital," Palmer said.  "We brought this product family to market in 
   less than six months.  While some companies try to make customers 
   choose between CISC and RISC architectures, with Digital, customers can 
   select Windows NT and whichever platform meets their business needs."
         Service revenues were $1.452 billion, compared with the $1.470 
   billion reported in the same period last year.  While overall service 
   revenues were down slightly, the company's new Multivendor Customer 
   Services business continued to evidence significant growth.
         "Our Multivendor Customer Services business recorded a number of 
   significant wins over the past months," Palmer said.  "Last summer we 
   were designated as one of the launch support partners for Microsoft's 
   Windows 95 and, just recently, we were selected to provide worldwide 
   service and support for Compaq."     
         Product gross margin was 30.9 percent, compared with 25.5 percent 
   in the first quarter of a year ago.  Service gross margin was 33.8 
   percent compared with 35.5 percent in the comparable period last year.
         Digital ended the quarter with $1.501 billion in cash, an 
   increase of $620 million compared with last year.  The company ended 
   the 1995 fiscal year with $1.602 billion in cash.  For the third 
   consecutive quarter, Digital generated positive cash flow from 
   operations before restructuring.
         Mullarkey said although the company continues to make overall 
   progress in the asset management area, the quarter was adversely 
   affected by selected shortages in components supplies that caused some 
   manufacturing delays and resulted in higher than planned inventories. 
                            
                                           THREE-MONTH PERIOD ENDED   
                                         SEPTEMBER 30,      OCTOBER 1,
                                              1995             1994    
 Product sales...................        $  1,818,659       $ 1,652,651 
 Service and other revenues......           1,452,461         1,469,821 
 Total operating revenues........           3,271,120         3,122,472 
 Cost of product sales...........           1,256,678         1,230,666 
 Service expense and cost of
  other revenues.................             960,907           948,672 
 Research and engineering 
  expenses.......................             256,432           287,788 
 Selling, general and 
  administrative expenses........             734,434           836,367 
 Operating income/(loss).........              62,669          (181,021)
 Net interest expense............               5,892             9,700 
 Income/(loss) before income 
  taxes and cumulative effect
  of change in accounting 
  principle......................              56,777          (190,721)
 Provision for income taxes......               8,606             4,352 
 Income/(loss) before 
  cumulative effect of change in 
  accounting principle...........              48,171          (195,073)
 Benefit due to cumulative effect 
  of change in accounting 
  principle......................                 -              64,503 
 Net income/(loss)...............              48,171          (130,570)
 Dividend on preferred stock.....               8,875             8,875 
 Net income/(loss) applicable
  to common stock................        $     39,296       $  (139,445)
                         
 Per common share (1):                   
 Income/(loss) applicable before 
  cumulative effect of change in 
  accounting principle............       $       0.26       $     (1.44)
 Benefit due to cumulative effect
  of change in accounting 
  principle.......................                -                0.46 
 Net income/(loss) applicable                    
  per common share................       $       0.26        $    (0.98)
 Weighted average common 
  shares outstanding..............            151,574           141,609
   
         Note (1): Per common share amounts are calculated based on the 
   weighted average number of common shares and common share 
   equivalents outstanding during periods of net income, after 
   deducting applicable preferred stock dividends.  Per share amounts 
   are calculated based only on the weighted average number of common 
   shares outstanding during periods of net loss, after deducting 
   preferred stock dividends.
 
 Cash and cash equivalents........                 $     1,501,311 
 Accounts receivables, net........                       3,048,120 
 Inventories......................                       2,216,625 
 Prepaid expenses, deferred income 
   taxes and other current assets.                         336,068 
 Total current assets.............                       7,102,124 
 Property, plant and equipment,net                       2,237,516 
 Other assets.....................                         404,058 
 Total assets.....................                       9,743,698 
                         
 Bank loans and current portion of
   long-term debt.................                          13,201 
 Accrued restructuring costs......                         392,847 
 Total current liabilities........                       3,920,699 
 Long-term debt...................                       1,012,742 
 Postretirement and other 
   postemployment benefits........                       1,210,220 
 Total liabilities................                       6,147,819 
 Stockholders' equity.............                $      3,595,879 
                         
 Book value per common share......                $          21.19 
                         
 Non-U.S. revenues................QTR             $      2,074,394 
                                                  or           63%
                         
 Employee population (approximately)                        61,500 

    In terms of U.S. computer manufacturers, Digital slides to #4.
    		Qtrly revenue
    IBM         $16.754b
    HP         @$8b
    Compaq      $3.594b
    Digital     $3.271b
    
    Honorable mention goes to Intel ($4.171b) and Motorola ($6.851b),
    while larger, aren't usually considered computer manufacturers.
    Apple ($3.003b, +20%) isn't terribly far back.

    
    
    Quarterly comparisons in Q1 aren't really fair though, are they?
    I agree with the general point that Compaq is growing faster
    than we are and that they will pass us soon.  But the Q1 figures
    probably overstate the case.
    
    Kaizad

Kaizad:

> Quarterly comparisons in Q1 aren't really fair though, are they?

  Why? Because we have traditionally had a "if it doesn't move,
  ship it!" philosophy, often leading to anemic first quarters?

  Or because the Christmas season is coming and IBM, Compaq, H/P,
  and Apple will do much of their consumer-oriented business during
  Q2, whereas we won't?
                                   Atlant

    
    All I am saying is that the yearly numbers won't look as bad as the Q1
    numbers.
    
    Kaizad

    Compaq and Digital have different "fiscal years" making a comparison
    difficult.  Compaq just passed Digital this quarter, so a view
    of a previous four quarters will show Digital with higher revenue.
    But Compaq's $3.594b quarter represents a 27% increase in
    revenue (vs. year ago) while Digital is growing at 11%, so if
    you want to make "we're bigger than they are if you look back
    at the whole previous year" claims, do it quick.
    
    Interestingly, if Apple continues growing at @20% and Digital at
    @11% from current levels, next quarter both will be at @$3.6b.
    A strong Christmas season for Apple could put Digital down to #5!

    
    anyone know enough accounting to figure out how we are actually doing ?
    
    12 or more years ago, my accounting teacher said that 'profit can be
    what you want to make it be, all that counts is cash..'. So, we *used*
    net cash this quarter. How can cashflow be positive thru the quarter if
    the total at the end is less than when we started. I'm sure someone
    will explain..
    
    What is stock doing today ?
    
    
    AW

    
    
      Cash flow was positive _WHEN FACTORING OUT THE COST OF
    RESTRUCTURING_.  I.e.  the same operation would have generated
    a positive cash flow if we weren't simultaneously conducting
    restructuring activities.  (Note that in one of the statements to
    the public, palmer is quoted as saying future restructuring would
    be payed for out of continuing operations,  not out of another
    giant restructuring charge.   The significance is that there will
    be a drain on earnings while restructuring is going on, which 
    distorts the health of the underlying business.
    
      Cash is important only in avoiding a crisis of liquidity.  A company
    generating a positive cash flow from operations can sustain large
    operating losses for far longer than a company with  the same 
    amount of (non-liquid) assets who run out of cash and can't meet their
    payroll or pay suppliers etc.  In fact,  a profitable company can 
    run into trouble if it is unable to generate sufficient cash flow
    to meet its needs.  (Picture a company selling product as fast as
    they can make it, but getting paid in IOU's...)
    
      Cash can also be manipulated (independent of the profit or loss
    situation)  by  delaying payment to suppliers,  or shortening the
    lag time in which money is collected from customers etc.
    
      Balance sheets are like squeezing a bubble.  You can't focus on any
    one line item as a measure of a company's overall performance.
    
      Or that's how my wife explained it to me, anyway...
    
    
    					-al (not a finance person.)
    

re .28
cashflow calculations include some items that do not go through the 
cash account. usually the major one is depreciation.

the bubble model is excellent.  you can make one number be what you want
it to be, within some fairly broad limits.  juggling another one is harder,
the third one harder still, and over time they all get much harder.
accountants don't like going to jail any more than other folks,
so much of the manipulation consists of accidently cutting off one 
factor early and accidently keeping another part active.
stop the clocks on the shipping dock, and blow a fuse in accounts payable.
hypothetical examples, of course.

re: ranking of Computer vendors

With regard to Compaq the situation is probably far worse (for us) than it
first appears. Traditionally Digital has about 50-50 split between products
and services. To the best of my knowledge Compaq doesn't have any significant
services business, so in product terms they are now way past us. :-(

Re: Apple

They have just had their fiscal year end and are ramping up for Christmas
so this is the best time of year for them.

M

    it amuses me that every quarter we see reasons listed why that
    particular quarter doesn't really reflect how we are doing.

    to .31
    
    Depreciation does not affect cashflow

    Interest expense is way down.  Maybe we used some of that cash balance
    to pay off some of our debt...

        re. .34
    
        Depreciation .................................. nnn
             Accumulated Depreciation ........................ nnn
    
            This depreciation entry reduces a firm's income, yet it does not
        reduce cash.  Because cash is not reduced by depreciation, it must be
        added back to net income to arrive at the cash provided by operations.
    
    	Either I misunderstood the response or my accounting book is
    	wrong....
    

    I attended a quarterly meeting today and the explanation given for the
    cash situation was that inventories cost us.
    
    On the good side, the SG&A is getting better and the Company expects to
    meet its goal with growth, not cuts.  Although there will continue to
    be some layoffs, they will be more than offset by hiring to get the
    needed skills.
    
    Mark

    .37
    
    Did they explain how we will grow???????????????
    
    

    3 key areas for aggressive growth:
    
    VLM
    WNT
    VAX to Alpha migration

    to .36
    Why must accumulated depreciation be 'added back' to cash? Cash and
    income are very different things. I can be very profitable and be
    draining my cash. The balancing entry to depreciation shows us as a
    decrease in assets. Nothing to do with cash.

re .40
the confusion is understandable.  cash flow calculations trip up more
accounting students than any other topic, imho.
i'll try to put together an explanation, but it will be a while.
you can find the technique in any elementary accounting text.

you are right that cash and income are very different things.

>>    Why must accumulated depreciation be 'added back' to cash? Cash and
>>    income are very different things. I can be very profitable and be
>>    draining my cash. 

so are cash and depreciation.  the key fact is .31 referred to cash flow
"calculations".  it is not practical to summarize all the transactions that
affect the cash account.  instead, the accountants "back into" the
cash flow from summaries.  the calculation is practical rather than
theoretical from first principles, but it is theoretically correct.

the confusing phrases such as "cash flow from depreciation" refer to
how it was computed rather than what it means.