Conference 7.286::digital

    i heared the loss is 3 million per day, so that makes it 3x30=90 million
    per month.
    
    /nasser

    
    	I think that speculation on loss rates is dangerous in this
    notesfile until the quarterly info becomes public, but having said
    that, I can't believe that we're losing $1 billion a month.  We "only"
    spent $3.5 billion (from the Q1FY93 report) to cover all the product
    creation, selling costs, engineering, SG&A, etc., costs for all of the
    first quarter.  To lose $1 billion a month (ie. $3 billion for a
    quarter) would require us to be only getting around *$166 million*
    in revenue per month.  ( ($3.5b - $3.0b) / 3 )  Sales might still be
    sluggish, but I think it is very safe to say that sales aren't anywhere
    near _that_ far down.  Especially considering that that same Q1 report
    showed a "total operating revenues" rate of around $3.3 billion for the
    quarter, or an average of $1.1 billion per month.  I would find it very
    hard to believe that the monthly sales average would drop 85%
    ($1.1b -> $166m) in one quarter.  Therefore, I think this rumor can be
    safely ignored.
    
    							-craig

    Let's try to figure this out based on Q1 info which is public
    knowledge.
    
    Q1 loss in FY93 - $240M
    Loss per month  -   80M
    Loss per day    -    4M
    Loss per second -   $50 per second, 24 hours a day, every business day!
    
    

    Not quite so.   The $ 1B a month is a gross average.  The real figure
    is what the financial community calls the 'Break-Even Point'.  That
    is the point where you have covered all your expenses with $0.00
    balance, that is no earnings/no loss.   If our quarterly break-even
    point is around the $ 3B mark, then you can assume that the gross
    monthly average is $ 1B a month.   What that means is that on the
    average you better be selling around $ 1B monthly to be safe.  However,
    the usual trend in DEC is to skew revenue to weeks 12 & 13 (Quarter
    end).   So the $ 1B mark is a figure, not a bankrupcy statement.
    The most important part for us is that we are not reaching the Break-
    Even Point, that is mainly due to the fact that we have discounted
    several of our big VAX (Vax 9000, VAX 6000, VAX 7000) and also are
    skewing more sales to lower profit items such as Personal Computers.
    Not having the profit margins (because computers are commodity items)
    we then choose to achieve the Break-Even Point by slashing our higher
    expense items, namely you and me.
    
    

    And here is another sobering thought...
    
    If we loose, layoff (heck tell it like it is, after all they are not
    miss-placed.), 5,000 good people per quarter -- thats:
    
    385 people per week
     77 people per day
    9.62 people per 8 hour day
    
    That's 1 person every 6.24 minutes.
    

  According to an article in the Colorado Springs Gazette (excerpt below)
  we have been losing

        $4 million a day over the last 4 years

  Is this accurate?  I wonder how many people in Digital are aware of the
  real magnitude of our losses.  The fact that we lost $6 billion over the
  last 4 years was news to me!  I didn't know it was that high.


<><><><><><><><>  T h e   V O G O N   N e w s   S e r v i c e  <><><><><><><><>

 Edition : 3156             Thursday 15-Sep-1994            Circulation :  5761 

        VNS COMPUTER NEWS .................................  343 Lines
        VNS TECHNOLOGY WATCH ..............................   38   "


VNS COMPUTER NEWS:                            [Tracy Talcott, VNS Computer Desk]
==================                            [Littleton, MA, USA              ]


 Digital - Can the empire be rebuilt?
	{Colorado Springs Gazette Telegraph, 11-Sep-94, p. 1}
	{Contributed by William Leitz}

 By Joanna Bean Gazette Telegraph

   A business textbook would make it sound simple: more sales mean more money.
   So when orders came pouring in for Digital Equipment Corp.'s workstations
 earlier this year, company managers were elated.  Analysts were optimistic.
 The company's stock price moved higher.
   Then, Digital lost money . . . again.
   What was once the world's second-largest computer maker has become a place
 where money is lost at a dizzying pace -- nearly $6 billion in the past four
 years.
   That's almost $4 million a day, every day.
   Digital's stock, which peaked at nearly $200 a share in 1987, now trades at
 about $24.
   The company has become a stumbling giant, unable to respond quickly to
 changing technology and lean new competitors.  After five years of
 restructuring, Digital's revenue is still flat, and its business costs are
 still higher than competitors.

 ... 

Whether or not the $6B figure is accurate, averaging out the loss over
four years does not imply that we are STILL losing that much.  Indeed, I
think our losses have been reduced dramatically in the past year.

					Steve

As I recall, the Q4 loss from operations was on the order of $180M.

That's about $1.5M to $2M per day, depending upon how you count it.

  re: .7

     by saying we are "still losing" I was basing that on all the
     losses we've had up through the most recent quarter (Q4FY94)
     since the time the first few notes were posted in Dec. 92.
     we've posted losses in almost every quarter since then, so
     as of the end of Q4 we are/were 'still losing' as compared
     with 1992. 

  re: .8
 
     i agree, i thought the Q4 loss must be one of the biggest
     ever, although i don't have a good memory of the past record..
     was it the worst?  if not what was? 

     Joann

the Q4 loss was $160m with $1.2b restructuring charge and $350m write off

    
    Regarding phrases like "losing xxx million dollars per day":
    
    Perhaps it was Ross Perot who started this?  I don't know.  At my
    current salary, losing $50 per day (or even $20 per day) is a lot
    of money.  But an individual who makes $100 trillion dollars a year,
    losing several million per day is no big deal.  My point is that it is
    all relative.  Taking what Digital loses and dividing by 365 days times
    x years and telling everyone we are losing y million dollars per year
    is meaningless.
    
    If the intent of these statements is to make people feel pain/pressure,
    then making the calculation and reciting the figure is useful.  But,
    if you want to give yourself an idea of how good or poorly Digital is
    doing, I suggest you use a better measurement like cash-flows per
    quarter; you cannot stop there either since you must then compare your
    figures to other similar companies to tell how Digital is doing _relative_
    to others.  To know how well you are doing in business, your analysis
    must use a comparison.
    
    Currently, many employees are comparing their tiny incomes to the large
    incomes/losses of a large corporate body called Digital Equipment
    Corporation.  And they are coming up with conclusions like Digital is
    really doing bad because I certainly could not afford to lose x million
    per day.
    
    My bottom line is:  Please ensure your analysis is relative to
    something similar so that a more educated comparison, and therefore
    conclusion, can be made.
    
    
    Dennis

If all the dollars Digital has lost since 1992 were laid end to end ....

I'd like if one end was at the end of my driveway!

Dave

RE: .12 "It's all relative"

Maybe it should be phrased differently:

    If Digital is losing 180M/quarter, and still has 72K employees, it
    would have to cut everyone's pay by $10K *just to break even* (let
    alone "be profitable").

Maybe $10K/year employee loss is "affordable"...?  If this isn't so bad,
are you ready for a $10K pay cut?

    >> If all the dollars Digital has lost since 1992 were laid end to end ....

    Hey, there's another useful statistic!  :-) 


    I understand it is all relative and that even a $6 billion loss
    doesn't mean much by itself.  I think we need to know the losses as
    compared to the assets, the worth of the company.  But do we ever
    get that kind of information?  I know I don't.. It may be there
    for us but it's not as easily accessible as these narrow focused
    news articles broadcasting our loss figures.

    When I first saw the $6 billion in the article I saw it relative to
    one of the only financial measurements I had heard that ever meant
    something to me.  Back in the late 80s we used to have $2 billion in
    cash.  The  corporate execs used to try to reassure us with that
    statement in DVNs.  I never took that statement as any reassurance 
    due to the relativity factor.  However, after reading this article it
    brought back to mind that this security bed is now gone, plus we have
    much more debt as compared to those healthier days.  But then this
    is probably how all businesses run these days so there's no need to
    get too concerned over that. 

    So back to to original topic.. IF there really is any use at all in
    knowing the dollar amount of what we are losing... how is it even
    possible to know the current loss figure, when are losses are stated
    in terms such as these?  $160m with $1.2b restructuring charge and
    $350m write off 
  
    When we (like all companies) qualify the losses like this, we get away
    with saying we lost only $160M.  But it seems to me we also lost $1.2B
    and $350M, no matter what the reasons were. 

    
    re: .14
    
    I know that many have actually felt that they would be loyal to
    Digital and cut their pay by so many thousand dollars and that will
    help us stay afloat.  This is a rediculous idea since this is similar
    to being on a large boat in the Pacific Ocean with a large hole in
    the center (water gushing out through it) and all of the loyal
    employees say they will volunteer to use larger buckets to remove the
    water from the hull.  This shows the dedication of these employees but
    we still have a great big hole in the hull and using bigger buckets or
    bailing water faster will NOT help us.
    
    I'm not trying to be negative, but a sacrifice (e.g., paycut), in this
    case is not the answer.  If you give a few million to someone who
    doesn't know how to make money, nothing will change -- no matter how
    much money you continue to give him/her.  I heard a saying somewhere: 
    "If you're running East looking for a sunset, you've got a problem!  No
    matter how positive you are, it won't happen".
    
    Dennis
    
    ps.  Whatever statistics we use, I hope that everyone in the company
    can comprehend the trouble we are in and I hope that everyone in this
    company does their best to help turn Digital around.  I firmly believe
    we have the ability -- we've just got to get to the point where we use
    it!  I hope also that everyone realizes that although the bad new tends
    to receive lots of press, there are many bright things happening at
    this company and I ask that everyone take the time to look at those
    bright spots too.
    

I wasn't suggesting a paycut (and, just for the record, I've *never*
suggested an outright paycut, *only* a pay *deferral* using company
stock.  I also said that raises should be grantable, initially in stock,
precisely so performance could be rewarded.)

.14 was simply intended to put things in more "concrete" terms that
people could understand directly (e.g. n% of *their* salary), since
people seem to have some difficulty relating to the magnitude of
the problem...

    See note 3261.0 - 3261.35 for discussion of *ONLY* a $4K paycut.  We
    can keep that discussion there.  Ya all talkin' 'bout a $10K--start
    another note. . .

    
    	Re.14 and .17
    
    	Yo be talking about best part of a 50% pay cut on the right side of
    the pond!!!!!
    
    	Lets get real, huh!  However you cut it, if it were to be done,
    percentages would be the ONLY way.
    
    				Malcolm.

>             <<< Note 2276.12 by TLE::PERIQUET "Dennis Periquet" >>>
>                             -< It's all relative >-
>...
>    if you want to give yourself an idea of how good or poorly Digital is
>    doing, I suggest you use a better measurement like cash-flows per
>    quarter; 

But that's EXACTLY what the current statements of the operating loss are.
Over the quarter (or year, or day, or whatever) we take in $X, we pay out $Y.
If Y is greater than X, we lost $Y-X for that period.
The loss comes out of the previously accumulated resources of the company.
The "accumulated resources" are mainly moneys fronted to us by investors 
(stockholders' contributions), moneys saved from previous surplusses (when
X was bigger than Y), and promises of moneys (loans and credit).

When Bob Palmer talks about having a "strong balance sheet," he is 
talking about our having sufficient resources to weather these losses
until we can get to the point where X is greater than Y on an ongoing basis.

>    you cannot stop there either since you must then compare your
>    figures to other similar companies to tell how Digital is doing _relative_
>    to others.  To know how well you are doing in business, your analysis
>    must use a comparison.

Nope.  Anyone who is regularly losing money is at risk of going broke, 
exhausting those accumulated resources.
If everybody in a given business is losing money, then some will fail before
others.  Maybe (usually) it will get to a point where there is enough business
to sustain those who remain, and things can stabilize.
This is called a "shakeout."

>    My bottom line is:  Please ensure your analysis is relative to
>    something similar so that a more educated comparison, and therefore
>    conclusion, can be made.

The only "relative" aspect of this scenario is whether you go first, later,
or survive.


- tom]

I know of one entity that has been losing over $1B/day over the last
10 years: The United States Government.  Compared to them, Digital's
financial position looks peachy!

    
    That may be so, but unlike the US government Digital
    can't sent operatives in flak vests and fatigues to
    collect..