Conference 7.286::digital

    Gee, I just read the new Digital Key Contact list (4/13/94) and found
    154 VPs & highers listed.  Seems like we just can't get the job done
    even with all these executive folks in place.
    
    Mark
    

    These are very disappointing, but not surprising, results.  You can't
    win without direction, as so many others have noted.  Internal and
    external observers all say the same thing - Without a vision, the
    people will perish.  
    
    Cutting destroys morale and produces results like these.  At some point
    we need to drive a stake in the ground and say "This is the team, we
    live or we die together."  It is clear direction, resolve, and
    commitment that wins battles.  
    
    I believe we have the people, the products, and yes the management team
    to win.  Add focus - a laser like focus- to those ingredients and we
    will indeed win.

    Does this mean things can only get better?

    Digital's stock has stop trading.  At the time it stop trading, the
    price was at 24; down 4 7/8.

    re: Note 3000.0 and Digital's spiralling losses ...
    
    Two significant things stand out in this report:
    
    	We had a tremendous amount of product scheduled to ship in the
    quarter that didn't make it. It not only cost us revenue, but also
    really undermined customer confidence in our ability to remain a
    viable computer vendor. One remark heard in my major account was to
    the effect that, while HP has long delivery times, at least they don't
    promise stuff and then slip the date three times ...
    
    	The decline in our service revenues were steep. While the report
    attributes it to the decline in our traditional installed base, it
    may also be a direct result of the layoffs of individual contributors
    who *produce* revenue instead of staff and management who *consume* it.
    In my own delivery unit, we are currently resource-constrained, not
    opportunity-constrained. But we're still in a declining spiral as the
    directives to cut headcount continue, while no viable plan is in place
    to increase revenues or margin.
    
    	Palmer's comments about cost controls scare me the most. It's true
    that we don't have a competitive cost structure, but the problems are
    no longer related to poor expense controls. We have some very basic
    flaws in the way we do business, and the costs associated with these
    problems are incredible. I still continue to see meetings packed with
    managers and staff engaged in turf wars, where no thought is payed to
    the customers or their problems. I still continue to see sales reps
    consumed with making the Digital process work, instead of spending time
    with customers or working on new sales campaigns. And I still continue
    to see an erosion in the empowerment of individual contributors *and*
    first-line management. Now everything takes not only sign-off from a
    VP, but in many cases, it takes approval from the SLT as well.
    
    When do these guys even get a chance to work on strategy, while they're
    busy signing purchase approvals for office supplies and Lotus???
    
    Geoff

    I hear rumors that we're going to have deep cuts in manufacturing.
    I wonder how exactly that's going to help us when we're already
    having trouble building stuff as fast as it's ordered?

    			Alfred

    
    re; .6
    
    The biggest surprise for me also was the comment on "cost control", it
    appears to me that the main problem is Revenue, or lack of. 

	re: .3
		We need LEADERSHIP. We have the people, we have the
		products, we don't have the leadership. 

		It is management's job to set the vision and then
		LEAD us there.  "Setting direction" is a passive,
		defensive, uncommitted action. Consider the
		difference between:


			Go that way  and Come this way


		We are drowning in a bureaucracy polluted with a
		management mindset where plausible deniability
		seems to be the order of the day.  The only
		question is, have we now sunk for the last time?
		

    Why did I expect some of the loss to be _publically_
    attributed to the loss of customer focus which is 
    accompanying the current round of re-organisation
    and headcount cutting?

    Gee I wonder how huge Bob's bonus will be this year?

    re: .9
    
    I avoided using vision and leadership because the words in many
    quarters turn people off;  setting direction was intended as a synonym. 
    Your point is well taken, however.  We absolutely need leadership and
    vision.  Actually, we have all colluded in the failure to develop a
    vision by not demanding that it be the first priority.  This is what
    got HP out of their hole a few years ago.  It is absolutely essential
    that we do the same.  
    
    If we are all in agreement, then what actions can we, must we, take as
    individuals to make it happen?  We too have a responsibility to lead.
    
    My suggestion:  write to the SLT and let them know where you stand. 
    Make VISION the rallying cry.

This company will not make any money until we stop the layoffs and
reorganizations.  Neither of these things help us provide what customers want.

Paul

    
    I agree with Alfred, we can't ship anything out now as it is, how would
    further downsizing in manufacturing help any? Maybe we ought to TFSO
    some of those highly paid VP's that have been brought on board in the
    past couple of years. Palmer will be out by September if this
    continues.
    Wall Street is going to pound our stock but good in the next few weeks,
    as well they probably should. I was hoping for a small profit this
    quarter, silly me...................
    
    Mark

What is 'Provision for Income Taxes'? What ever it was more than doubled
between '93 & '94.

What is 'Cost of Product Sales'? That also went up quite a bit by almost $2
million.

I think Uncle Bob's chat is very enlightening. Almost everything
he puts forth as a solution is based on shrinking (hacking away at internal
problems) rather than expanding (as in making the business grow). Why not just
get the internal hacking over with and get back to work? Sooner or later someone
somewhere has to wakeup and see that this strategy isnt working. Well
really Im not so surprised about the loss. I think that until we have someone
in command who has a clue well continue the quarterly fire drills. If all else
fails we could package our reorg strategies (we seem to have LOTS of experience
doing them) and sell them to other companies.

    The following reply has been contributed by a member of our community
    who wishes to remain anonymous.  If you wish to contact the author by
    mail, please send your message to ROWLET::AINSLEY, specifying the
    conference name and note number. Your message will be forwarded with
    your name attached  unless you request otherwise.

    Bob - Co-moderator DIGITAL


Notice in today's operating results announcement the "Dividends on Preferred 
Shares   $  1,775,00"  that adds in to the "Net Loss Applicable to Common 
Stock".   Since Digital sold 16 million shares of preferred stock in March 
1994 (reported on the 22nd), that amounts to 11 cents earnings per preferred 
share (for about two weeks).  Can that be correct?  And my regular shares are
worth $4 or $5 less on this announcement?  :-(

re Note 3000.12 by ICS::DONNELLAN:

>     Actually, we have all colluded in the failure to develop a
>     vision by not demanding that it be the first priority.  

        This is certainly true, but we must not repeat the mistake of
        the past by insisting on one vision, "one strategy" that can
        keep a $10B+ company thriving.  The available market
        segments/shares aren't big enough for that.  If you try to
        apply one strategy to many differing market segments, you
        probably can't satisfy more than one, and will lose in the
        others.

        I think that there are plenty of $1B+ strategies that parts
        of Digital could pursue very well, and perhaps a $5+ strategy
        or two.  But those parts must be independent enough to make
        the differing decisions that their strategies require.  A
        start has been made with the PC business, but the rest of the
        company must follow.

        Bob

Cut, cut, cut.  Reorg, Reorg, Reorg.  What is this, some sort of religion??

Bob

    I, too, found the cost control control comments interesting.  Is the
    BOD holding the top officers accountable on this front?  I recently
    heard that Lucente spent 1 million dollars on a sales force meeting
    which included the purchase of 50,000 dollars of fru-fru pens, Mont
    Blanc or some such nonsense, that were handed out to the sales force.
    

    re: .17
    
    I agree.  Even though it is possible to develop an overiding vision (or
    theme)  that encompasses all parts of the corporation (both Ge and Ford
    are perhaps examples) each unit needs to particularize the concept in
    the way that makes the most sense for it.  I believe Storage has done
    this as well.  
    
    In fact, it might make far more sense for the vision to bubble up,
    rather than trickle down, with each business unit creating its own
    mission.  However it is done, it will not be effective unless it is
    felt, understood and lived at all levels of the corporation.  Xerox was
    not able to turn itself around until that was accomplished. 
    Unfortunately it took several years.  We don't have that much time any
    longer.
    

re: .12

	I don't think that I agree that we all have the responsibility
	to lead. This, for me, comes under the myth of employee empowerment
	which, in the words of Dr. E. Deming, is bull$#!^.  I can't set
	the direction and then motivate and/or coerce others to follow.

	What I can do, and what we all can do, is follow the lead of
	those that have the authority to do so. Unfortunately those
	that do, aren't.  None of the managers that are visible to me
	have the guts to stake out a position and then fight for it,
	leading their organizations in that fight. They all seem to 
	operate in a "hedging the bets" mode. You know, the let's do X,
	but, let's also do Y in case there's a problem and keep Z resources
	doing the same old thing cause we can't afford to rock the boat.

	This very clearly sends the message that X ISN'T the way to go.
	The troops that actually have to make the effort succeed won't
	rally around and work hard because they see at least two other
	efforts underway to undercut them at the slightest slip. Efforts
	which are getting at least equal Management attention units and
	resources, most likely.

	You can't hedge your bets when you're down to your last dollar.

This talk about employyees taking the lead is all well and good but
theres one fly in the ointment. Management has to buy into it too.
I think that impossible with the current mindset...we make the decisions
and you follow them. In other words the employees have nothing to contribute
other than doing as told.

    
    I agree with .8
    
    Focus has to turn toward revenue while at the same time paying strict
    attention to costs. It seems we're not been able to achieve a
    balance here.
    The company needs to undergo some real fundamental change in the way
    that it does business both inside and outside. So far, we've only
    managed to bring on board  "new" senior managers at the top
    who then get consumed by the "concrete" slab separating them and
    employees. In fact, I seriously wonder how committed some of these new
    executives are given the golden parachutes some have negotiated prior
    to joining Digital. It seems that this would serve as a dis-incentive for 
    them to really achieve. 
    
    In any event, I would expect things to continue to get
    worse until someone bites the bullet as it were  and begins to
    fundamentally remake the company. Patronage is still alive and well and
    in fact is thriving within certain organizations. Patronage in and of
    itself wouldn't be so bad if the majority of the people filling the
    positions were the best people we could get for the position. But I can
    safely say beyond any shadow of a doubt that this is far from the case
    in some organizations. It's really too bad and enormously frustrating.
    It's there for all of us to see yet we can't seem to affect its change.
    One thing is certain however. If we can't for whatever the reason
    facilitate the change that is necessary, the free market system will
    just as it did with Wang.
    
    I believe we have some good products and in some areas excellent
    product strategies but it'll not do much good until we are "enabled"
    again as a company. I think moving toward independent functioning entities
    that are responsible for their own profit and loss is a step in the
    right direction. Decentralizing the funding model would also go a long way
    in helping these product entities become successful. 

    
    
    Anyone going to bother ironing five shirts over the weekend ???
    
    Ian.
    

Let's get out of here!!!!!! The ships going down!!!! And all the
rats with it!!!!! Geez- and I though BP had a future. HAHHAHAHA!!!!!
He's gone - soon too!!!!!

Maybe digital can start looking at how WANG pulled out of it's
nosedive? looks like we're headed down the same road. How much 
you think we can get for the mill?

    I wish I thought for a second that the results of this news were going
    to be anything but a blood bath in the field.  The SLT is going to cut
    some x,000's from the worker bee population; another reserve is going 
    to drag Q4 results down; and the market perception of us will continue 
    to worsen.
    
    Yesterday I was exited by the technical news: Sable is out and
    impressive; Rdb/Alpha sets new world records; over 5000 applications 
    are out on Alpha. So much of what we need is in place.  Unfortunately, 
    on the business process side, the management side, and the marketplace
    perception side, too much of what we don't need is STILL IN PLACE.
    
    I work with customers; I sell and I support systems & services; and
    I'm absolutely sure that as the death spiral continues, my name is
    going to be on a TSFO list. It maybe today, it maybe tomorrow but I'm
    convinced I'll be let go before some of the drones I know are canned.
    It is so disheartening.    
    
    I hope this is the darkness before the dawn; I suspect it is just more
    of the endless night.
    
    melancholy in maine
    jbeich
    

    
    	Well, one of the analysts wrote a month or two ago - "Palmer can't
    cut his way to profit (might have been to growth)."  I can't help but
    think that must be true.  We've gone beyond cutting to the bone, maybe
    we've gone to far in that direction!  We must increase revenue, there
    is no other way out of this mess as far as I can see.
    
    				Malcolm.     

>================================================================================
>Note 3000.13        Digital Reports 3rd Quarter Oper. Results           13 of 25
>FUNYET::ANDERSON "VideoHardcopySalesSupportGeneration" 4 lines  15-APR-1994 10:27
>--------------------------------------------------------------------------------
>                             -< Isn't it obvious? >-
>
>This company will not make any money until we stop the layoffs and
>reorganizations.  Neither of these things help us provide what customers want.
>

	Paul,

	People have become so tired of all these reorganisations that many
	want to leave. The athmosphere is so rotten and morale so low that
	stopping the layoffs will not stop the rot.

	Until Digital does something about its management structure and the
	type of managers it has it will continue on a downward spiral. It is
	getting worse than the civil service. We have some excellent management
	material but the vast majority of these people are not in management 
	jobs. Here where I work, for the first time in 10 years I had started
	to see at the top the right type of manager and an excellent personnel
	manager, but it is too late.

	There are still people climbing over one another's back to get on, the
	greatest injustices I have suffered have been here at Digital and 
	despite all the efforts I made to get them righted, nothing was done.

	
	El Gringo

I heard somebody tell a joke the other day.

		What's the Difference between Wang and Digital?

		5 years

El Gringo

    	re.19 I also heard about the Sales event. Something in the
    	      neighborhood of $50k was spent on those pens. Note
    	      the pens were forgotten about and never sent to the
    	      event.

    	I was just wondering if there's anyone left in Services who could
    comment on the revenue decline there?

    A little over 2 years ago, when we were still Digital Services,  in my 
    neck of the woods we had 70 delivery people.  Most of them were busy on 
    customer engagements generating revenue.
    
    Today, in the same corner, we have 18 delivery individuals.  I suspect
    the delta with revenue generators may have some impact, although it's
    probably very slight. :-)
    
    -- Kevin

    Have the share stopped trading permanently or just while results were
    announced??
    
    Rick.

They were stopped for an imbalance (IE too many more 
sell orders than buy or something like that) and appear
to have restarted.

DEC 23 3/8, change -5 1/2; at 11:52.

    The NYSE automatically suspends trading of any share which has a
    greater than x% (I can't recall the value of 'x') fall.
    
    It's to prevent too much damage from the computerised automatic
    trading applications --- introduced after the 80-something crash.
    
    The suspension is normally lifted in a matter of hours. 

[CLARK] @quote
DEC 28 7/8, change -0 3/8; DJIA 3663.25, change +1.78 at 16:00.
Report entered at Thu Apr 14 16:18:52 1994.

CLARK] @quote
DEC 25, change -3 7/8; DJIA 3665.62, change +2.37 at 10:08.
Report entered at Fri Apr 15 10:08:34 1994. Exit

[CLARK] @quote
DEC 24, change -4 7/8; DJIA 3669.50, change +6.25 at 10:25.
Report entered at Fri Apr 15 10:25:42 1994.

[CLARK] @quote
DEC 25 1/8, change -3 3/4; DJIA 3664.14, change +0.89 at 10:35.
Report entered at Fri Apr 15 10:35:06 1994.

[CLARK] @quote
DEC 24 5/8, change -4 1/4; DJIA 3663.25, change +0.00 at 10:44.
Report entered at Fri Apr 15 11:07:40 1994.

[CLARK] @quote
DEC 23 3/8, change -5 1/2; DJIA 3668.90, change +5.65 at 11:52.
Report entered at Fri Apr 15 12:15:08 1994.

    >>> Services decline
    
    - Smaller better boxes, lower maintenance, volume has not come up
    enough to stem decline of maintenance on VAX and VT terminals, while
    customers replace with Alpha and PC's. We all saw this coming 2 years
    ago, so no surprise there....
    
    - how do we make up the shortfall then, aha.. customised services, when
    do we commit to Outsourcing, why only months ago, and pray sir what is
    the typical lead time for a major deal, 9 months if you are lucky....
    
    - Selling through re-sellers, should further reduce the MCS revenue
    
    I happen to believe that DC will make money, I am not sure though that
    Wall St will wait so long for us to turn the tanker around, and make us
    into Anderson Clones. If we get bought up, people are hardly going to
    be enthused about a bit of business that is trying hard to lose its
    technology experts, while what is left teaches clients those things we
    are so good at "Business Process Re-engineering"
    

	
	DEC 23 3/8, change -5 1/2; DJIA 3668.90, change +5.65 at 11:52
	
	sometime in the future will we be saying "I shoulda bought"? ;^)

    I went over Q2's results as well as Q3. If you look at the employee
    headcount it appears that we have only reduced the workforce by 300. 
    
    	
    		Q2 Headcount 			Q3 Headcount
    	
    		DEC 	87,500             	DEC 	85,700
          	Other    4,800                  Other 	 6,300
    		==============	              	==============
    		Total   92,300                  Total   92,000
    
    
    	DEC employess have been reduced by 1,800 but Others have increased
    by 1,500. It just seems strange.
                                    

    Well, the usual reaction to this loss will take place.  Management
    will get together to figure out how many of their "workers" will
    get TFSO'd.  Using the usual bottoms up approach, the ratio of
    workers to managers will soon be 1:1.......soon to be a company of
    of 70,000 managers only!

    remember every one, it is always the darkest just befor the sun rise !
    
    \nasser
    

    Nope, nasser, that's "Before the storm".  Big difference.

    
    	I thought the rising sun was the symbol of .....................

Actually it's always darkest just before it goes totally black.

    
    Its also very dark when you've been eaten by something a lot bigger
    than yourself.
    
    Alan T.
    

    
        RE  .40
    
    
        Paul,  the "Others" in the Q2, Q3 headcount is probably the 
        VP population.
    
    			:-((
    

    
    been dark so long, the bulb must have blown.
    
    stock ....stock..where's...the stock.
    
    

    > stock ....stock..where's...the stock.
    
    its 23 5/8, at 2:43 pm
    
    time to buy !!
    
    \nasser

    re: 50
    
    no thanks.
    
    

    
    
     To quote Al Pacino:
    
     Someone turn on the light I'm sittinnn in the daaarrk here , Who Ha!
    
    
     me:
    
     We're screwed to the wall now!

    23 1/8.  I personally AM buying.  The same reactionaries who dump it
    at every report will probably jump on it when RP walks.

    
    re .53
    
    Will he jump or will he be pushed?
    
    (RP that is)
    
    

    not with my money you don't!

    Let's see.... I think $8B and 35K employees when we bottom out.
    
    By the way, I was in attendance at a "Town Meeting" with Ed Lucente.
    What a charmer.  To paraphrase him, we need to stop all of the TFSO
    crap and just start firing people for poor performance.  HMMMMMMMMM!?
    Where would that leave the SLT and all of the VP's and managers who
    have presided over this disaster?
    
    Answer: Exactly where they are, deciding which individual contributors
            to hammer.

    re: .21
    
     right on...
    
    	Lead, Follow, or get out of the way...

    What optimists!  The answer is "escorted", not "pushed".

    
    "Been done so long, it looks like up to me."
    
    				- Richard Farina (I think) 
                                                          

    RE: -1
    
    "Been DOWN so long, it looks up to me."
    
    Author is correct, I believe.
    
    HTH,

    I was told last week by my manager and it was confirmed in a con call
    on Wed that Sales Support (my role in Digital life) will be drastically 
    cut. "We cannot afford the resources that we have." was the statement
    made.
    
    It seems to me that when all the analysts say expenses appear
    under control and that we need to grow the revenue, cutting the 
    people you need to grow the revenue will only lead to rev
                                                             e
                                                              n
                                                               u
                                                                e decline.
    
    Maybe I'm wrong. Maybe the products are so good they'll sell
    themselves.
    

Revenues went up (very slightly) in Q3 vs. Q2, yet the loss was over $100million
greater in Q3 vs. Q2.  Doesn't that imply that expenses shot way up somewhere?

But where?  Headcount remained essentially flat--if anything, the last of the
generous TFSO packages must've been expiring by the end of Q2 at the latest.
So where'd the extra $100million come from?

- paul

    re .60
    How bout Jim Morrison?

    remember when Unisys stock was less than $3.    $10b company too.  Go
    ahead, buy at $23.
    
    Do you feel lucky?,  Well, do ya?
    
    

    What's UNISYS stock now?

    Digital, trading at 23 3/4, up from 23 1/8.  :^] Tex

    Unisys, 14 5/8.

    about $15.  
    

    Sounds like we need to wait one more quarter :-)
    
    Oh, that was mean.  Frankly, somebody tell me what happens when stock
    gets too low, a buy out?
    
    

re: .64

naw, more likely Leadbelly, or Robert Johnson, or "Trad."

but Farina used it as a title for his first book

							- paul

I believe it was his last book -- he was killed in a motorcycle accident
shortly after its publication.

    Closed -6 1/8.  Have a nice weekend.

    It appears that the "rowboat" has finally turned around (see below).
    Maybe if we (Canada) can pull a little harder on our oars we can 
    put enough tension on the rope to turn around the "big ship".
    
    Robin
    
    
                        DIGITAL INTERNAL USE ONLY Document
    
                 I N T E R O F F I C E   M E M O R A N D U M
    
                                      Doc. No:  000029
                                      Date:     15-Apr-1994 01:18pm EST
                                      From:     RON LARKIN @TRO
                                                LARKIN.RON AT A1 at TROOA at 
                                      Dept:     President Digital Canada
                                      Tel No:   DTN 631-7506
    
    TO: See Below
    
    Subject: WORLDWIDE Q3 FINANCIAL RESULTS
    
    As many of you may have heard, the corporation released the world-wide
    Q3 results today to the investor world and to the press.
    Unfortunately, those results were disappointing.
    
    However, there was good news to share. Globally, we are experiencing
    significant growth in many areas, such as our PC business, Storage and
    in our workstation business, which is driven by the success of our
    Alpha AXP systems. Alpha AXP systems now represent nearly 50 per cent
    of total system revenues.
    
    In Canada, we had an excellent quarter, and it's our objective to help
    lead the corporation to profitability.
    
            - We had record revenues which were 106% of forecast, making
              this the best quarter in two years. The revenues also exceeded
              forecast in many of our businesses including SBU, PCs and MCS.
    
              In all, revenues grew by 13% and we gained market share.
    
            - Our order rate was also excellent, and we achieved 104% of
              forecast and 11% growth -- making this the best quarter in two
              years.
    
            - We managed our expenses well against our target and our
              improvement was 16 per cent over the same quarter last
              fiscal year.
    
            - In collections, another important measurement, we achieved our
              target of 66 days and cash target of $146 million.
    
    We wanted to pass this information on to you so that you can share it
    with your fellow employees, your customers and our partners. It is
    through efforts such as those exhibited here in Canada in the last
    quarter that will turn Digital worldwide back to profit and growth.
    
    Regards,
    Ron
    

>    Closed -6 1/8.  Have a nice weekend.

    Hey, some day!  I made money and lost money and now I'm headin' home
    for a beer!  There's a country western song in here somewhere...
    
    						Tex

RE. 74

Congratulations to you Ron and your people. A job well. It takes teamwork to
turn a ship as big as "d|i|g|t|a|l".

Thanks

Keep up the good work.

DEC 22 3/4, change -6 1/8; DJIA 3661.47, change -1.78 at 16:00.
Report entered at Fri Apr 15 16:24:19 1994.

    
    
    unless we realise we have to move to a high volume / low cost product 
    mentality..... 

    re -1
    
    yup.

    RE: .73  by WRAFLC::GILLEY 
    
    >Closed -6 1/8.  Have a nice weekend.
    
    I don't know much about the stock market and maybe I should take this
    to DIGITAL_INVESTING, but when you say -6 1/8 is that the selling
    price?  I mean, do I have to now pay somebody 6 1/8 to take my shares?
    

It lost 6 & 1/8 'points' from its opening price for the day.

If the share price was ~200 it is no big change, %-wise.

If the share price was ~29 it is a significant change, %-wise.

You pay money to *buy* shares of stock.

You receive money when you *sell* shares of stock.

The buy/sell price is determined on ?63;1;2 the open As an illustration,
imagine you owned a car that a day ago folkes were willing to pay $2900
dollars for. They since found out you were a poor mechanic and now are
willing to only pay $2287 for the car. On paper, you just lost $613.
You will not really have a loss (or gain) unless you really sell the car.
You can understand the pain if you once bought the car for $10,000 in
hopes the value would increase.

Lee   

--------------------------------------------------------------------------------
    The Boston Globe had a front-page article on Digital today (Saturday).
    
    Here is my reaction to it, in an Internet message sent to the Globe.
    
    
Dear Sir or Madame,

I just read your page 1 Story "Digital loses 183.3m; more layoffs likely" by
Stephen C. Dube in the Saturday Globe.

The quotes in the second column of the first page are all exceedingly 
negative and in my opinion *not responsible journalism*. One quote said
"Go say your prayers." It is as though the Boston Globe wants to see 
Digital Equipment Corporation fail. 

Does the Boston Globe want to see Digital fail?  The opinions of the Globe
have a direct connection to the perception that Digital employees have
of their company, as well as our customers.

I have a few thoughts that should have been considered:

  + You compare Digital to Wang Laboratories and Prime Computer. 
    I am mostly aware of differences between Wang and Digital, such as
    the fact that Digital openly supports and implements industry standards 
    in its products, which seemed to be lacking in certain products
    from Wang Laboratories in the early 1980s. 

    Comparing the two companies is a fairly mindless, stereotyping 
    thing to do. It is like assuming that the IQ of two people
    are the same because they are both in their 30s. STOP DOING IT!

  + Digital is in a transition from reliance on its VAX line of computers
    to its newer Alpha AXP line of computers and also PCs. The Alpha AXP
    architecture is a 64-bit architecture with many advantages (including
    its extensibility) over its rivals. In fact, most Digital's main 
    competitors are quietly working on 64-bit replacements for their 
    existing 32-bit architectures.

    I think you can emphasize that "changing architectures in poor economic 
    times" is a more modern version of the old saying "changing horses in 
    mid-stream."

  + Why can't the Globe mention something positive Digital has been doing for 
    a change, such as:

     The many products announced April 12, some of which will definitely
     allow Digital to attract many new customers.

     Digital has started a fairly aggressive advertising campaign in order to
     gain better name recognition.

     Digital has a greatly improved UNIX operating system, DEC OSF/1, which
     replaced the ULTRIX operating system. 

     Over 5000 applications are now available for Alpha AXP systems.      


  + I would have preferred to see the positive news at the end of the article 
    (PCs, Workstations) to appear earlier.

You have my permission to use any of my ideas or actual text as is in any
article, but I do not want this published as a letter to the editor. An 
expert on competitive marketing or Bob Palmer's office would in a much 
better position than I to write a more complete response.

Michael J. Etzel
(Employee of Digital Equipment Corporation, Nashua, NH)

    [Signature deleted]

Many of those responsible for servicing customers are entangled in "the
Digital way of working" and are expending their valuable time and energy
within instead of directly on customers. Process has replaced innovation
and desire.

Lee

    This shouldn,t have been a big surprise to anyone, all you had to  do
    was to read the wall street journal, several months ago when they
    predicted a lost for this quarter. its seems they have a better system
    of tracking income to expenses....
    
    This is a great company that unfortunantely is heading in the wrong
    direction. why aren't we advertising Alpha axp the fastest computer
    processor in the world nothing, nothing even comes close. You don't
     have to be a rocket scientist to figure these things out.

    The stock closed at 22 7/8 - I though the guy on my floor who 
    showed me the numbers had created a Mosaic screen as a joke...
    
    What's the difference between the VPs and the Workers at Digital
    today.
    
    If Digital goes out of business, the VPs (for the most part)
    will pay for their homes, send their children to College, and 
    take regular vacations anywhere they want.
    
    If Digital goes under, I have exactly three paychecks to find another
    job, keep my house in my name, and feed my family.
    
    Forget TFSO -- We're talking about the company staying alive...
    
    Optimism not withstanding about my own future prospects, I have invested 
    heavily in learning, using Digital and Selling Digital's technology
    and am not ready to abandon that investment.
    
    I still believe in our products and tools and think we have some of 
    the best computer solutions in the world.  
    
    You have to have a passion for what you sell, what you use to solve
    customer's problems -- If you don't have passion and zeal then the 
    customers will sense it and buy from someone who has surpreme 
    confidence that their product can do the Job better/quicker/cheaper.
    
    Folks the business we should be in is customer solutions, Not sales, 
    Not chips, Not visions or architectures; solutions.
    
    We should be a Service Company that just happened to be in the 
    computer business.
    
    
    Customers don't want Alpha, They don't want software, multimedia,
    or even financing.. They want a cost effective ROI to reduce 
    costs of their business, A strategic advantage over other companies
    in the marketplace, or Something that differenciates them in their
    markets...   If I can buy any of those things with a single part#
    great.. If it's a project -- fine... as long as their's a real ROI...
    
    We have done terrible job of solutions.  We've done a terrible job
    of just keeping our commodity customers content.
    
    OpenVMS is perhaps the finest, best Operating system with a 10,000,000
    user installed base.  We make them feel like step children to a market
    that is only sighly larger (the entire Unix market) and strive to 
    duplicate a less functional standard base in Unix's likeness.  
    
    What do customers see when we have Vice Presidents publicly quoted as 
    blaming our flagship product for our woes.  True or not, what does 
    this say to our customers about their choices of chosing Digital 
    solutions at some time in the past? (and their choices in the future)
    
    
    
    OSF/1 -- The most (varient) Unified Unix in the Industry, the only 
    64Bit Unix in the industry. We tell our customers that we'll have 
    xyz's Current Functionality 8-18 months from now.  Think these
    markets will stand still?  If Competitors are challenging us with
    their alleged cluster functionality we should comparing it againt
    OpenVMS -- No appologies but if you want Clusters today -- and want
    to use the best most dependable operating system in the Industry -- 
    OpenVMS is available today, with more market share than any Individual 
    Unix Vendor..  OSF/1 needs applications and Market Share, both take 
    time
    
    -- Do we have the time go chasing after a market(Unix) that Crested and
       is poised to be eclipsed by desktop products? (IMHO)
    
    WNT -- The server of choice for 1995.  Striping, Mirroring, SQL access,
    Security, all in a $1500 package that a secretary can use and manage.
    That's the model folks.. 1-500 PCs will be managed by some worker 
    already on site with no special or on-going training...  This has 
    the potential of eliminating services on all systems up to 40k, 
    because it's a do-it-your self job.
    
    PCs -- Commodities, Commodities, Commodities...
           ADVERTIZE, ADVERTIZE, ADVERTIZE...
    
    Networking -- TCP/IP is a fact of life, OSI is at least two year and 
    one bankrupty away from being sold into corporate America -- We need
    to survive and sell something today to deliver OSI in 1997..
    
    Customers aren't happy or content in any of these areas -- We've 
    dropped the ball.  We need to do something to convince people that
    we are not going out of business and to highlight our products
    to the mass/commodity markets to get them accepted.
    
    
    Step 1 
    
    Advertize AXP/Digital on TV to expose us to potential and historical
    customers -- Folks tend to regard Companies that advertize on TV
    as being solvent enough (if they can pay for TV time they must be 
    doing OK..)  
    
    Step 2 
    
    70% of our business is OpenVMS, and will be for some time to come.
    Target our existing customers with OpenVMS is alive and well messages
    programs, free software (like the Alpha CDrom for OpenvMS tools).
    (We've begun this with the Momentus Upgrade program but it needs to 
    be expanded to include public statements by All of Digital's VPs
    on the importance of OpenVMS -- It's been neglected for too long...)
    
    Aggressive attack the Unix Market with OpenVMS clusters as the Highest
    availablity Server around.  Xopen will even let us use "UNIX"(tm) with 
    OpenVMS -- Do it to prove our openness and position OpenVMS as UNIX+ 
    (It may be too late for this but with OSF/1's delivery schedules I 
    don't think that OSF/1 will be viable in this space (for production) 
    in the short term)
    
    (If we don't do something in this space, there will not be enough
    time or money to grow a Unix market, NT market or any other
    "Replacement" market for OpenVMS we have to keep and grow the 
    Installed base.  Proof 1 is we can go head to head with Unix 
    do things better then them.  Proof 2 we are as good (or better) 
    as mainframe softwares and could downsize datacenters effectively too.)
    
    Step 3 
    
    Postion OSF/1 as a full Unified Unix System.  Talk about futures but 
    position those futures to blur OpenVMS functionality only slightly.
    
    Get some D*** Applications.  Even if we have to Pay for them to do
    the port and marketing -- Target #1 or #2 in their markets only,
    we don't need 5000 #3,#4...#x if they don't have any market share.
    
    
    Step 4
    
    Position and Sell WNT against Novell, and as an Upgrade Path to
    the existing Pathworks/LanManager installed base.  Sell Teamlinks,
    Linkworks and develop DESKtop systems that do things other 
    companies can't...Identify the top 5 desktop problems -- Solve
    them(I think Linkworks will -- One day)
    
    Integrate Xwindows/pathworks and Sell into the PC world as the 
    logical server of choice(with Alpha).
    
    
    Step 5
    
    Sell Integration Sevices to connect companies to the Internet, to 
    each Other, to other Companies.  Provide service solutions that are
    easy to sell and understand at first -- Move to more complex solutions
    sells as our portfolio of standard projects grow...
    
    Step 6
    
    Use DECUS, Ed Services, User Groups, local advertizing (in each city)
    to drive home the fact that Digital is Here, and isn't floundering...
    
    If we don't do something to address each of these points -- Well, 
    as I've said the VPs don't have to worry .. but we do...
    
    

    Some pretty good points Paul.
    
    --- Gavin

    From the Saturday Los Angeles Times:
    
    Taken out of context-
    .."The mind-set of senior management-that cost cutting is going to be
    a solution-has been proven wrong. said Richard Buchanan, a former
    Digital employee who is now a senior analyst at Forrester Research in
    Cambridge, Mass.  "The problem is related to corporate strategy.  They
    do not have one.
    
    Palmer said Friday that the losses are unacceptable to this management
    and obvioulsy disappointing."  He indicated that a new round of layoffs
    is likely, but he did not provide details.  Dis is already in the
    process of cutting the work force from 92,000 worldwide to 85,000, far
    below its 1989 peak of about 140,000.
    
    I wonder if the layoffs will affect the 145+ VP and upper-level
    mentioned in .1 or at the bottom amongst us.  No one is going to be
    safe in this round.

    There are many organizations and suborganizations taking bows and kudos
    for making or exceeding their FORECAST.  Unfortunately, this year there
    seems to be multiple goals being assigned.  The districts were given a
    BUDGET, and they were told to forecast against it.  After a few
    quarters of misses, they were then given a TARGET, and told to forecast
    against it.  
    
    Now we report how we did on our forecast as compared to BUDGET as
    compared to TARGET.  People take pride in making their forecast even if
    they were forecasting NOT to make their budget or TARGET.  
    
    Soon we will realize that the only metric is profitability per
    employee.  In order to make that we will have to be doing everything
    else right.

re: the $100million difference

Looking through the numbers i see that Total Cost of Sales increased by
about $76million from Q2 to Q3, and SG&A went up by about $45million, so
that's where the bulk of our increased costs (and loss) came from.

I think the NY Times quoted Palmer as complaining about the quality (or
lack thereof) of revenue forecasting from Sales.  (Feeling Lucente's hot
breath on his neck?)  It looks more like expenses (not balanced by a
corresponding increase in revenues) that did us in.  Anyone have any
ideas where these added expenses came from?  It seems doubtful that they
would have come from salaries, etc., given the flat headcount and the
miniscule percentages given out for raises.
								- paul

    re: .91 where did the increased expenses come from?
    
>Looking through the numbers i see that Total Cost of Sales increased by
>about $76million from Q2 to Q3, and SG&A went up by about $45million, so
>that's where the bulk of our increased costs (and loss) came from.
    
    I think there were two main factors in the Cost of Sales equation:
    
    	We had *mass* quantities of product that were ordered, built, but
    	not shipped. We incurred the expense to build these products and
    	didn't receive the revenues because we didn't ship.
    
    	We are scrambling to fill orders without having adequate stocks in
    	place, so we do things like buy disk drives from HP because our own
    	are in short supply. Not very cost-efficient.
    
    The SG&A expenses probably have a lot to do with the massive confusion
    in the Sales and Sales Support ranks, where people are flying back and
    forth trying to figure out who's in charge this week. The managers in
    our office seem to spend lots more time on planes or hotels than they
    do in their own offices, or even (gasp!) in front of a customer. Not
    to mention that it *still* requires a four-hour meeting with a sales
    rep and five other people to figure out how to quote a $400 piece of
    Digital software.
    
    But I'm sure the standard knee-jerk reaction is already in full swing:
    
    	- Kill training for Q4
    	- Call all managers to at least two weeks of offsite meetings
    	- Cancel any travel for peons to see actual customers
    	- Cancel all advertising budgets, except for products we can't ship
    	- Monitor certs-per-second, keeping reps from seeing customers
    	- Reorganize any group which has been stable for more than 30 days
    	- Layoffs, Layoffs, Layoffs
    
    Geoff

Re: .92, "meeting of 4 people to decide how to quote $400 worth of
product"

Digital seems to be so entagled with internal 'webbing' that we are
strangling ourselves. Macro-managers are micro-managing people.

Just yesterday on the phone I talked to an ex-DEC person that was TFSO'd
about 1.5 or 2 years ago. (He was not an idle individual when he left, he
was actually selling network goods and services, which is what he now
does outside of DEC.) He told me the story of a customer that asked him
to come out and quote a small bit of network wiring. He went the site
with notepad in hand and found out exactly what the customer wanted. He
made some suggestions on how the customer could better do some of the
things that he wanted to accomplish (i.e. correct some mistakes). THe
customer was delighted. My pal went back *THE NEXT DAY* and handed him
the quote... the customer was impressed!

The customer relayed his attempts to get Digital to respond... it took 3
weeks of phone calls to get the rep from DEC to arrive... it then took an
additional *3 WEEKS* to supply the quote for the work (internal
meetings/calls?)- and surprise, surprise, it was for TWICE the amount as the
outside quote (gotta pay for all those managers)!

Sombody has to react and cut away these encumbrances... I've seen few
olympic swimmers gird themselves with chains and lead weights before
competing, why does Digital do this?

I suggested to a Digital manager one day that many sales and services
functions could (to my uninformed eye) continue to function and bring in
revenue even if the layers of management above them disappeared
completely. He too had the same observation and had suggested somthing
similar to the 'higher ups'. The reply was "But where would you get your
management support?"

I believe this gives us some insight as to how pervasive the problem is.

Lee

    In the last 93 replies I detect about 90% grousing, (all well deserved,
    I might add!), but I would like to see if the noters culture can swing
    into a more positive, aggressive, and down right revolutionary
    direction. If we do not then I accuse us all of tacit complicity.....
    
    I liked the Canada results...
    
    I like the intent in Digital Consulting...
    
    I like the increase in advertising that I do see...
    
    I like the fact that a bit of bad news is bloody good publicity....
    
    I like the fact that there are a lot of us now outside the company, who
    still like most of what we make sell and service, and are in a position
    to influence that....
    
    I like the fact that we are best positioned to make something of the
    multi-media highways....
    
    go on admit it, we are pretty damm good!
    
    Establish your own management networks, work for people you respect,
    ignore the others, and above all look after our customers directly, do
    not expect anyone else in the company to do it as well as you can do
    it.
    
    Can I hear the rustle of response....? 
    
    p.s. I genuinely do not know what TFSO means, will someone please tell
    this Brit what it stands for.
    
    Peter Brand

Re 3000.92  

Geoff

>    I think there were two main factors in the Cost of Sales equation:
>    
>        We had *mass* quantities of product that were ordered, built, but
>        not shipped. We incurred the expense to build these products and
>        didn't receive the revenues because we didn't ship.

Not shipping will certainly hurt your revenue and bottom line, and is not
a sound way to do business,  but it should not be a factor in the "Cost of 
Sales equation".  The cost for these unshipped products should be in the
inventory line and not in COS.  If you look at the balance sheet, you will
see a total inventory line of $2,165M vs $1,755M at the end of FY93. I hope
that someone is looking at reducing this inventory line back down to the 
FY93 level, or lower, by the end of Q4. That should be one of the top
priorities.  The balance sheet shows a corresponding reduction in cash and
cash equivalents of about $400M.  That is not just a coincidence.  We have 
invested our cash in $400M of additional inventory.  That alone should give
the SLT nightmares.

OK, "let's pick ourselves up, dust ourselves down" and get on with solving
the problems.

Keep smiling and have a good day
Shalom
Baruch

    
    
    Digital: Fast Computers, slow management.

>  Total Operating Revenues        3,258,789,000     3,453,676,000
>  Selling, General & Admin.         954,903,000     1,050,600,000  
>  Net Loss                         (183,306,000)     ( 30,121,000)

    Those figures are all you need to know. Halve admin costs and there's 
    a good bottom line. Slash them by two thirds and we have a very good
    business. Assuming that the junk costs involved in selling a PC are
    lower than for a VAX or AlphaGeneration (tm), it begins to look as
    though a $100,000 sale of a system costs $40,000 in salesman's time,
    admin and central office overhead. The mind boggles...

    Laurie.

re: .97

Not always. They can sometimes be very fast. Just propose an initiative,
which has potential of allowing some of them to be paid to do program
management or something such, and look how quickly they can move.

The chances, that you can ever work for the "program" are minimal.

--Ritva

    
    
    what about ousting several dozens of CEOs and getting one
    good baseball coach instead?!!
    
    
    							-helmut

re Note 3000.92 by DPDMAI::UNLAND:

>     The SG&A expenses probably have a lot to do with the massive confusion
>     in the Sales and Sales Support ranks, where people are flying back and
>     forth trying to figure out who's in charge this week. The managers in
>     our office seem to spend lots more time on planes or hotels than they
>     do in their own offices, or even (gasp!) in front of a customer. 

        I'm sure I'm being naive about this, but around here we
        can't get travel authorization to go to the next building
        without VP approval.  If it weren't for the Internet I would
        have been forced to drop out of the larger
        professional/technical community entirely.  I haven't seen a
        customer in over a year.

        Bob

    Good thing we make watches, and the industry knows - we may take a
    lickin' but we keep on tickin'!

                      <<< Note 3000.94 by CHEFS::BRANDP >>>
                 -< I did'nt understand Quantum theory either >-
    
>>    p.s. I genuinely do not know what TFSO means, will someone please tell
>>    this Brit what it stands for.
  
Transition Financial Support Option (I THINK!)

    
>  + You compare Digital to Wang Laboratories and Prime Computer. 
>    Comparing the two companies is a fairly mindless, stereotyping 
>    thing to do. It is like assuming that the IQ of two people
>    are the same because they are both in their 30s. STOP DOING IT!

    I could not disagree with you more. Comparing Wang and Digital is 
    a very reasonable thing to do. Wang reorganized and cut itself until
    it was no longer a serious computer company. They cut first and
    evaluated second. First they cut revenue generating people and
    products. Then they looked at the numbers and blindly cut some
    more. They also made it harder to support their customers by cutting
    support staff and training budgets while talking about giving better
    support. I do not see any difference between this and what Digital is
    doing. 

    			Alfred

Hi,

   Loss = $183M     Employees = 92000     Approx  $2000  Loss per Employee

   Loss = $183M     VP's = 154            Approx  $1.2M  Loss per VP


   Finished Goods = 1,026,695,000

   If we had shipped 18% of this we would have made a profit instead of a loss.


Bryan

re Note 3000.24 by FUTURS::CROSSLEY:

>     Anyone going to bother ironing five shirts over the weekend ???
  
        Well, I can think of at least two possible answers to this:

        1)  Of course not -- here at headquarters (Massachusetts),
        Monday is a holiday.

        2)  Of course, you must always look your best when going on
        job interviews. :-}

        Bob

    RE: .82  by CSOADM::ROTH 
    
    re: .81  by me "Do I now have to pay someone 6 1/2 to take my stock"
    
    Thank you for your detailed answer, but I regret to inform you that I
    had omitted the appropriate emoticon for sarcasm in my previous reply.
    

    re.105
    
    It all depends on the margin!
    We probably sell quite a lot of goods/services, but what is the real
    margin?
    
    Tim

    Re: 30
    
    It looks like service made money AGAIN. But it also spent money. As a 
    "old timer" in service, I have seen the rise and fall of revenue from
    sales ('82 to present) in years, not quarters. I have only seen service
    revenue fall only maybe 3 quarters in the past 16 years. And now sales
    wants service to "sell". Who is still making money to support 93,000 
    employees. Looks like 19,000 service employees.
    
    
    Re: Digital vs. Wang
    
    No comparison. Wang had family problems, (Who really was the no. 1
    son?) Wang has no new technology. Wang has 4,000 employees (all living
    in Lowell, Mass.) If you want to talk about there PC's, take your kids
    to Circuit City. 
    
    Digital had ego problems. (K.O. must go!, remember) Digital introduced
    the ALPHA chip. And now we have a new president Bob (only in a Porche)
    Palmer. And 15 months later we have the same problems. We still want
    to cut costs and people and we have cut people. In service we have cut
    some costs. (educational services -- why learn??) For those who are
    watching headcount.. 93,000 people... im sorry 87,000 "employees" plus
    6,000 "others"... looks ok but ... when your group goes up from 8
    to 154 I have a question??? if you pay a v.p $800,000.00 plus his/her
    staff to run their "businesss unit" could it equal $185.1 million???
    
    sounds like Amway to me............

    >> Aggressive attack the Unix Market with OpenVMS clusters 
    
    
    Yeh, right, and watch HP, Sun, IBM beat us every time, with the
    'Digital is forcing you to go proprietary' arguments.

    
    Is it reasonable for a manager to manage 20 people?  If so, there sould
    be only 4 levels between low end food chain employees to the top. 
    Here's where we should start reorging.

04/18/94--Computer Industry News - FOR INTERNAL USE ONLY
(c) Dow Jones News Service

DIGITAL EQUIPMENT PROMISES OVERHAUL AFTER REPORTING WIDER 3RD-PERIOD LOSS

             Digital Equipment Corp. executives, acknowledging surprise at the
          size of the company's loss in its fiscal third quarter, promised a
          significant restructuring.
             Analysts predicted that Digital, which is based in Maynard,
          Mass., will be forced to shed 10,000 to 20,000 more workers at a
          cost of $500 million to $1 billion in charges. Those layoffs and
          charges would come after Digital sheds some 7,000 mostly temporary
          workers during the current quarter to reach a goal of a total work
          force of 85,000 by the end of its fiscal year June 30. The probable
          layoffs are another pothole on New England's bumpy road to economic
          recovery.

re: .111

I think i've heard that 20-30 employees per manager is the the norm in Japan.
Of course that means the managers have to spend most of their time on
administrative/people management stuff and don't have time for "managing up"
the career chain.  Darn! ;^)
								- paul

    
    
    
       I was told that in Q2 we left $182 million "on the docks" and in Q3
    it was $340 million.
    
       If this is true, and based on what I've been hearing it is, we
    should have made $149 million in Q2 and $157 million in Q3. Even if
    these numbers are off by 10 or 15 million, we STILL "should" have 
    made money.
    
       The last time we had these types of delivery problems was back in 
    1985/86. The major difference was back then we were still making money
    on large margin products. 
    
    
                 

Let's do some math.
					      Percent 
					  of Product Sales

	Product Sales = $ 1,749,621,000		100.0%
	Cost of Product
		Sales = $ 1,210,478,000		 69.2 %
			  -------------		-----
	 Gross Margin = $   539,143,000		 30.8 %


	Assuming the same mix of product, for every additional
	dollar that we could have shipped in Q3 FY94, we would
	have added another $.308 to the bottom line.  If we had
	shipped another $340 million, then we would have contributed
	$104.72 Million in gross margin.  This would have reduced the
	loss from $183 Million  approx $78M.

    I'm not sure this is really true - depends on what was really on the
    docks in terms of product mix.  If we shipped all $340M, we would then
    also have to associate the appropriate "Cost of Product Sales" figures
    with that revenue.  Since Cost of Product Sales (otherwise known in the
    accounting world as Cost of Goods Sold) in Q3 suggests a serious margin
    problem, we would most likely not have seen much profit from shipping this
    product.  The big question is, if Product Sales (revenue) declined for
    the quarter, how could the cost of that amount of product go up?  
    
    It looks to me like the stuff that we are shipping is costing us lots
    of money to build (may be labor or materials - can't tell from the
    financial statements).  Our Selling costs (field costs) are declining
    as a percentage of revenue - that's good.  Our Service Expense declined
    in relation to a decline in Service Revenue.  But our Product Costs
    went up against declining Product Revenue ...
    
    Maybe we should ask Bob P. to return to the Manufacturing and Logistics
    arena from whence he came ...
                                                                    

    touche'

Any effective  company  is  made  up  of many small groups who do their jobs
incredibly well.  Tom Peters and others have written extensively about how a
drive  for  excellence  makes  some companies industry leaders, often at the
expense of their slower competitors.

We can  grouse  about  the  number  of  VPs,  and  the number of ineffective
managers,  but  the  core  issue  is  making the people and teams across the
company  be the very best they can be.  But the profoundly sad truth is that
it  is  very  difficult, perhaps close to impossible, to do that within this
company  today.  The result are teams of people producing far less than they
could, and a company that is losing money.

Why can't these teams get aggressive and strive to be excellent? I have some
ideas,  but  they are based on my narrow view of Digital.  It would be worth
our while to get an honest answer to that, and then act on it.

From my  experience  it  is  damn  hard  to  be  your best in such a chaotic
environment.  With the constant threat of TFSO management uses strange logic
in making decisions, more often acting in protective ways rather than taking
any  risks.   Couple  that with the continual loss of staff in the groups we
work  with  -  almost daily I hear of someone I know who is leaving - and it
begins to feel like a battle, one which we're clearly losing. 

We all  know  it's  going  to  get worse.  If we follow our standard pattern
there  will  be  many  meetings,  many layoffs, lots more confusion, lots of
broken  informal  networks, and it's only going to get more difficult to get
something  excellent  done.  I fear for our future.  If we follow our by-now
normal pattern of slash and cut to fix the problem.

What would  I  do? If it was clear to me that we needed to make cuts, I'd do
so, but do it quickly and get it over with.  Then I'd start a program to fix
our  corporate  culture  (remember  that?  every  company has one - ours has
become  one  of  fear).  I'd empower line managers to do what we pay them to
do.   Ask  them  what  they  need  to  do their job, give it to them (within
reason), then let them manage how they deliver.  They could spend within the
limits we agreed to, and no VP need be involved.  If they exceed their goals
they  get rewarded, and their story would get told to others.  I would focus
on  making  those  corporate  atomic  building blocks - people and teams, as
effective  as  they  can  be,  and  I'd make sure management focused only on
providing general direction and support.

The analogy  that this is a battle feels true.  We are fighting for not only
our  jobs,  but  this  company.   We are not going to win the war unless the
troops  are  well-armed and motivated, and have complete faith in those that
are  leading  them.   While senior management works out whatever changes are
needed  in  strategy  and direction I hope they pay some attention to how to
get  the  troops  reenergized.   Right  now  they're  real  worried  and  in
confusion, and we're wasting too much valuable energy and time.

Thorgan

    RE:Why can't these teams get aggressive and strive to be excellent?
    
    Well here in good old Detroit the workstation team is made up
    of three of us. We have one budget that we share rather then 
    individual budgets. We fought for and won this battle and it improves
    performance. We work together and support ourselves having no sales
    support available. We work long hours and if we don't sell we
    don't eat, the bills don't get paid etc etc. The stress rate is very 
    high and you will find nobody more aggressive then us and we will
    exceed our budget this year. 
    
    The team concept can work if you have the right players and motivation.
    Try implementing pay for performance company wide and you will see
    people flee by the thousands voluntarily. Think of all that TFSO
    money we can save too.
    
    			-Jim-

.120
This all presupposes that the company has some sort of plan on how to be
profitable which has clearly been communicated to the 'troops'. If asked what
that plan is I couldnt honestly say. Does anyone else know? At one
time it was silicon, software and some other thing(s). From past history our
main products seem more likely to be layoffs closely followed by
management-speak.

    RE:Why can't these teams get aggressive and strive to be excellent? 
    
    I don't pretend to have the answer to this question. My point is that
    this is a question that senior management should ask and strive to
    answer. I propose that we ought to pay attention at both the strategy
    level, and also to how to get people and teams functioning as well as
    they can - and you need to do both simultaneously.
    
    We've all worked in places where one or two very good people can make a
    dramatic difference. We've seen places where one superstar programmer
    or engineer can deliver more than teams of people. Like it or not, we
    need to keep or attract such people if we want to be a leader. But
    we're not creating a company that such people *want* to work for. 
    
    Thorgan

    
    
    I was totally dismayed the other day when I went to a Science Fair at
    my sons' school while having a conversation with the priciple and other
    parents.  The school priciple turned to me (Knowing I am a Digital
    Employee) and asked 'so what does Digital make today anyway'.  I was
    embarrased to think that a company that has been around for 30 + yrs
    has not been able to inform the general public as to what they make.
    Only one person in the crowd of 8 people knew what we made and I was
    releiveto find d that he had knowledge of the ALPHA Ch.
    
    <<<Flash Back>>>
    
    I recalled all the times in years past when family and friends asked me
    to take a look at a problem with their DIGITAL Watch thinking of course
    that all we made were watches or anything with the word DIGITAL in it.
    Unfortunately it still happens today but not as often.  
    
    You'd think that somehow the # 2-3 Computer company in the WORLD would
    be able to inform the people as to what they make.   
    
    	EX: Digital Equipment Corporation  'The Computer Company'...
    
    	        'For the next Century and Beyond'		
    
    We have not made ourselves know well and I think this is another major
    part of our ailments.
    
    When you ask someone about say FORD 'Quality is job one' is what most
    anyone you know will come back with....I could go on and on...... 

    re: .120 and the new corporate culture of fear ...
    
    To me, it's become clear that middle and upper management have adopted
    a "bunker mentality" where risk-taking is dicouraged and CYA is the
    accepted mode of operation. This mindset has filtered down to the
    very lowest levels.
    
    Personally, I would propose that BP needs to explicitly break this
    trend. He needs to call those multitudes of VP's in and tell them:
    
    "Your job is gone, don't worry about it. Now tell me what risks you
     are willing to take to get it back." 
    
    Geoff
    

    re: WHAT NUMBER ARE WE...
    
    WE'RE NUMBER THREE... WE ARE NUMBER 3
    
    HEWY PACKERS ARE NUMBER TWO .. NUMBER 2
    
    1,000 LESS EMPLOYEES..  19 BILLLLLLLLLLLLLLLLLLLIIIIIIIIIIIIIOOON
    DOLLAR COMPANY ............
    
    
                      FYI

    RE: .125
    
    	I really don't understand why this is such a surprise to you or
    anyone.  Digital doesn't do a good job of advertising and in addition
    Digital typically puts a strong focus on the New England region.  I
    can't tell you how many times I've heard "60% of sales come from New
    England and 70+% come from East of the Mississippi."  What drives me
    made is that those same folks don't realize that West of the
    Mississippi is a BIG opportunity!   Yea, 30% of sales come from West of
    the Mississippi, BUT 70% of the OPPORTUNITY is in the WEST!  
    
    WAKE UP!!!
    
    	Consequently the further West you go, the fewer folks know about 
    Digital and it's products.  I also go crazy when asked who I work for
    and after I proudly respond "Digital", I get a blank look or little 
    reaction.  Then I would say "the number two (now number three or less)
    largest manufacturer of computers (usually alot more product detail
    given here.) n the world."  But then I remember....We don't advertise
    and when we do it's on a public channel supporting the Pops....now I
    enjoy the Pops now and then, but really folks the Pops doesn't stand
    a chance against anything but Mister Rodgers.  The masses watch sports,
    the nightly news, David Letterman or his competition, Sunday night
    movie, etc.  Yea, that time slot costs more, but you reach many more 
    people per $$$ spent.  Plus you reach all ages, etc.  But demographics 
    is a whole other topic and I've already said more than I intended.
    But understanding demographics is the key to current sales as well as 
    future sales (not all college folks watch the Pops.  A Digital banner
    at a Guns and Roses or Garth Brooks concert isn't a bad idea!!!

    Running with .128
    
    What about advertising on Rush's radio/TV shows?
    
    My wife and I happened to be channel surfing the other night and
    encountered a Digital commercial for the Xl series of PCs.  They didn't
    even show the picture.
    
    My wife's response, "?"

    I've been thinking a lot about this since Friday. I suspect that
    lots of of have. I'm wondering a couple of things. 

    We've had a lot of layoffs but costs are higher still. Doesn't that 
    suggest that the real problem with our costs is not head count?

    Secondly, we've had a lot of cuts already but they haven't worked.
    Shouldn't senior management, and perhaps the Board of Directors,
    take our continued loss out on the people who have been running
    the company and its, apparently, non productive restructuring and
    layoffs *before* another round of layoffs are planned? It seems
    foolish to blindly follow a strategy that seems to be hurting more
    then helping.

    			Alfred

Speaking of advertising, the Wall Street Journal commented that a big reason
for the higher Cost of Sales was an expensive marketing and advertising
campaign.  Apparently the campaign did not impact revenue though (so far).

								- paul

    Could anybody tell us what the share price is.
    Has it stopped falling?

    
    It's been said before and long ago, "There is a black hole in the
    balance sheet" and it hasn't been found yet!
    
    

re Note 3000.130 by CVG::THOMPSON:

>     It seems
>     foolish to blindly follow a strategy that seems to be hurting more
>     then helping.
  
        It's like that definition of insanity:  Doing the same thing
        as before yet expecting a different result.

        Bob

    At 11:47 the stock was at 21.5, up .375.

    Let's do the same thing as before only harder. Maybe it'll work if we
    just do *it* harder...
    
    
    
    "It's hard to sore with the eagles when you were with turkeys..."
    
    BUT, if we work hard enough, we should be able to get that turkey to
    fly.....
    

    re: .131
    
    In fact, our advertising has been focused on PC's, Alpha and
    Client/Server - all of which had impressive sales increases.
    
    BTW, "sales" the function is counted under "Sales, General
    and Administrative Expense", which was almost $100M lower in 1993.
    
    
    /ljj

	Just thought you might like an update about famous pens mentioned
	in note (3000.19).


            <<< HUMANE::DISK$NOTES:[NOTES$LIBRARY]DIGITAL.NOTE;1 >>>
                        -< The Digital way of working >-
================================================================================
Note 3000.19        Digital Reports 3rd Quarter Oper. Results          19 of 133
AYRPLN::ERVIN "Roots & Wings"                         6 lines  15-APR-1994 10:54
--------------------------------------------------------------------------------
    I, too, found the cost control control comments interesting.  Is the
    BOD holding the top officers accountable on this front?  I recently
    heard that Lucente spent 1 million dollars on a sales force meeting
    which included the purchase of 50,000 dollars of fru-fru pens, Mont
    Blanc or some such nonsense, that were handed out to the sales force.
    

[NOW-FOR-THE-REST-OF-THE-STORY]

	They bought the pens...

	1)	then they decided not to hand them out
	2)	then they wanted the vendor to take them back (NOT!)
	3)	then they couldn't find them
	4) 	then they found them, but not all of them (BIG surprise...)
	5) 	then they wanted the financial analyst to count them and lock 
                them up
	6)	but they had to be shipped from where they were to someplace
		new 
	7)	then they finally got there and were counted, and MORE were
		missing
	8) 	the financial analyst basically wasted 3 full days dealing
                with PENS.

	And they wonder why we're losing money.  Unbelievable.

	-Bruce-

re: .137

You're (i think) comparing Q3 FY94 with the comparable quarter in FY93.  I'm
just comparing Q3 FY94 to Q2 FY94 and trying to figure out why we lost about
$110 million more on essentially flat revenue and flat headcount.  Expenses
went up sharply in Q3!  It shows in both the Cost of Sales and SG&A lines for
Q3.  So if we spent a lot on advertising in Q3, it has not yet had any kind
of comparable payback in terms of revenue (vs. Q2).  Whether that is because
we didn't attract enough customers with our advertising and marketing or
because we couldn't build/ship product that the customers wanted is not clear.
Palmer seemed to be implying that a revenue increase was forecast (wrongly).

								- paul

P.s.  to emphasize, headcount was not a factor in the larger loss; so talk
	of dumping headcount to rectify the "cost structure" indicates that
	this was a structural problem all along, not something peculiar to
	this latest quarterly loss!

    re .131
    
    If we have an extensive marketing and advertising campaign, we are not
    getting our money worth out of it.  The only advertisements I see for
    Digital are for PCs in computer magazines and ads saying how wonderful
    Alpha AXP is in Digital news and review.  Then there are the "imagine"
    ads, but I have trouble seeing what they are advertising.  There are
    never ads in the Economist, Time, or other  similar magazines.  And I
    have never seen a Digital commercial.
    
    Matt
    

    
    Re: .140
    
    I saw an ad in a recent issue of either Newsweek or US News and World
    Report, I have forgotten which one it was. I believe it was the $90
    support service for PC apps.
    
    

Thic company needs liposuction; we're getting treated with leeches.

I just stumbled across an interesting ad in the latest New Media magazine. 
Visual reality's ad mentions the AXP/Alpha as "processors so fast they're
listed in the Guiness Book of records" touting one of their multi-media 
products that runs on Alpha/NT. It's nice to see someone else advertise
our stuff.

back to the handwringing in process

dave

    re: .132
    
    results of checks done moments ago:
    
    CTHQ2_Diane> @stock
    DEC 0, change +0; DJIA 0.00, change +0.00 at 0:00.
    Report entered at Tue Apr 19 13:23:22 1994.
    CTHQ2_Diane> @stock
    DEC unknown, change unknown; DJIA unknown, change unknown at unknown
    time.
    Report entered at Tue Apr 19 13:51:06 1994.
    CTHQ2_Diane> 

    >CTHQ2_Diane> @stock
    >    DEC 0, change +0; DJIA 0.00, change +0.00 at 0:00.
    
    
    OMIGOD !!
    
    we crashed !
    
    \nasser

    >    OMIGOD !!
    >    we crashed !
    
    and bounced!:
    
    DEC 21 1/8, change +0; DJIA 3585.02, change -35.40 at 13:36.
    Report entered at Tue Apr 19 14:02:21 1994.
    
    
    8^)

    
    The problem is simple. It is not just "middle management" that is
    pulling this company down. It is also the individual contributors whoms
    groups do not add any "EXTERNAL' nor internal value. These groups 
    perpetuate their own existance with paper work, political games, and
    mis-information. Nothing has changed except that we have less people.
    
    

    RE: It is also the individual contributors whoms groups do not add 
        any "EXTERNAL' nor internal value. These groups perpetuate their 
    	own existance with paper work, political games, and mis-information.
    
    So... you say it is the "individual contributors" who is at fault for
    this problem..... The "individual contributors" is merely doing as
    he/she is instructed to do, by management... If he/she was to do more
    or less, he/she would be fired.... It isn't the ICs job to determine if
    his/her job is adding value to the company..
    
    

    re: -1  This problem of individual contributors not contributing
    anything of value to anyone except themselves is not new.  We have seen
    some very good people who are very much missed get "the package" and we
    still see lots of highly paid fat cats lobying for their continued
    employment.  Makes me sick.
    
    re: sevral back on the orders we haven't shipped yet
    I wonder of the cost of sales (and all the costs of those orders up to
    that point) are not already included in the report.  Could it be that
    the revenue which would result from those sales would be largely
    profit?

    
    RE: It is also the individual contributors whoms groups do not add
        any "EXTERNAL' nor internal value. These groups perpetuate
        their own existance with paper work, political games, and
        mis-information.
             
    OK...Lets not focus on my "individual contributors comment. I am a I.C.
    It is those GROUPS(which is comprised of I.C.'s) that was my true
    intent of the reply. We all know of such groups. Don't we?
    
    

    THIRD TIME!
    
    Yup -- tried to put sumthin' in here twice before but the stuff missed
    the mark -- Third time's the charm.
    
    Here's an example of why were 184 million smackers in the s**t hole:
    
    In the MCAD space there is a premier piece of code known as PRO/E.  A
    super VAR of Parametric Technology resells PTC code and other leading
    MCAD/MCAE code.
    
    The sales reps get paid on the net margin they receive from both the
    hardware and software sale.
    
    A couple of years ago,they went through one of our stocking
    distributors - Merisel.  The president of the VAR wanted to get closer
    to DEC in a manner that was consistent with the VAR's relationship with
    SGI and H/P.
    
    We signed them up.  A couple of weeks ago, I was in the VAR's office
    reading their internal newspaper -- The VAR just signed an agreement to
    do business with another stocking distributor - This supposedly was
    initiated by our folks out east.  The distributor, (I'm sure with our
    participation) gave the VAR TEN demo units for their offices to demo
    applications -- Supposedly with no strings attached.
    
    That meant that the VAR went from being a Direct VAR to a TIERED VAR.
    
    The VAR's win is they now have systems to help sell the code without
    having to capitalize (spend money) on the hardware -- Great piece of
    negotiating on the part of the VAR.
    
    On the surface it sounds like a good strategy for us and I'm sure that the
    ULGs (Upper Level Guys) expect to see a return on that.
    
    The rest of the information is:
    
     o H/P gives these folks a 36% discount\
     o SGI gives them a 34% discount
     o DEC gives them a 26% discount --- BUT we gave them 10 systems for
       demo purposes - no strings
    
    Remember -- the Rep gets paid on net margin.  We are going into each and
    every deal at a 10% disadvantage.  To get parity, we have to pass on
    10% through the stocking distributor -- 
    
    Think about that -- We give 36 points to the distributor -- they pass
    on 26 points to the VAR.  To give them 10 more points, the deal costs
    us 46 points.
    
    CNBC pointed out in a news piece that the things we are selling -- low
    end stuff has no margin.
    
    Soooooo, I guess the strategy we have is to lose a little on every deal
    but make it up in volume.
    
    In a Town Hall meeting with Lucente, I told him that I was fed up with
    the good old boy network between me and him getting in the way of
    progress.  He didn't understand what I meant and at that point in time,
    my heart rate was about 200/min so I didn't expand.
    
    This is surely an example --- ANd there are others -- I'm sure that
    whoever did the deal on this one has yards of paper attesting to the
    goodness of the transaction -- I'll also bet the VAR's business drivers
    were left off of that paper.
    
    Aaaaaaaaaaaaaaaaaaaaaaaarrrrrrrrrrrrrrrrrrrrrgggggggggggggghhhhhhhhhhhh!
    
    I know I must be missing something on the deal -- There has to be
    something in it for us that I don't see.
    
    Dennis  
    

RE:        <<< Note 3000.150 by LUNER::SAUDELLI "Taurus the Bull" >>>
      
>>    It is those GROUPS(which is comprised of I.C.'s) that was my true
>>    intent of the reply. We all know of such groups. Don't we?
  
     ...and whose responsibility is the output of those groups?  The
     managers of those groups.  If the individuals do not contribute,
     it is the job of their managers to remedy that situation.

                                    Greg

    
    Apart from "we are disappointed" were there any attempt to communicate
    any reason for the loss ? Attempt to explanation ?

    
    Yes, the reason for our big loss is ......
    
    Our name change from Dec to Digital and nobody knows who we are
    anymore.
    
    What else could it be?
    

    re: 149
    
    Accounting rules dictate that Cost of Goods Sold be recognized during
    the same accounting periothat asthe Revenue is recognized.  Therefore,
    the Cost of Goods Sold in Q3 could not include the cost of goods on the
    dock but not shipped, as this is not yet revenue.  

    I called Micro Center to inquire about upgrading a DECstation 333c to a
    486 system.  When I told the technical sales rep that the system was
    made by DEC or Digital Equipment Corporation - he responded with -
    "Never heard of them."  Therefore, all these internal memos that DEC is
    9, 10, 12 or whatever number we want to advertise is meaningless
    because the guy on the street doesn't even know who we are.  When I 
    read a recent USA Today article on PCs it indicated the Top 10 PC
    manufactures and DEC was NOT one of them.  I wish DEC would quit
    patting ourselves on the back on how well we are doing in the PC
    business because retails stores outside of New England don't know who
    we are.
    
    Second, here is part of a recent VNS summary - Layoffs won't be
    insignificant and it will be in the general sales force.  My comments
    are: ???? Who's going to sell if we don't have a sales force?
    Distribution cannot do it all.
    
 Digital - Official: Layoffs "won't be insignificant"
	{The Nashua Telegraph, 17-Apr-94, p. 1}
   ...
   William M. Steul, chief financial officer, said Digital's direct sales force
 is most likely to be cut.  He said additional layoffs were "probable, and
 won't be insignificant."
   The company's management also was taking its hits in the wake of the
 financial news.
   "If management has clear goals, those goals are not being articulated down
 through the organization," said James Johnson, president of The Standish
 Group, a market research firm.
   ...
   Also, Digital's service business is dropping.
   "Digital got very dependent on hardware maintenance as a cash cow," said
 Chris Christiansen, an analyst with International Data Corp.  "That started to
 dry up and its has produced very negative results."
   "Customers are wondering why they have to buy comprehensive maintenance
 contracts when the stuff doesn't break," Christiansen said.
   ...
   Analysts also said the company may have difficulty regaining the faith of
 its investors and consumers.
   "The big problem now is restoring customer confidence, and that's an uphill
 battle," Johnson said.
   As for employees, many weren't surprised by the earnings drop and
 projections of more layoffs.
   "You kind of get used to that kind of news," said one Digital veteran, Jeff
 Lewis of Maynard.
    

An old note of Pat Sweeney's came to mind... written about 5 years ago,
in fact.

The final paragraph of note 765.39 may seem oddly prophetic to some...

Lee

Would somebody who really knows, please answer what several folk have asked - why is the 
cost of sales figure significantly increased in these results.

I would love to know what is actually included in the figure.

My undersatnding is that COGS is the cost to manufacture or buy the stuff we sell. It does not 
sense for this number to be increasing when we hear about improvements in manufacturing etc.

I find it particularly intriguing because in the subsidiary here we are being asked to cut SG&A.

Nothing wrong with that, but if COGS is going up, we buy from corporate, hence have no control
over our gross margin before SG&A.

Makes it tough for our management to run their business.

A confused, and trying to be positive about the future employee.

Chris S.

About being #1 or #2. I still remember that Palmer in one of his first speeches
two years ago said, that we would only focus on those markets/products where we
would be (or are) #1 #2. Now for how many of our products is this true at this
very moment? Reading the press, I guess that Linkworks qualifies, but that is
where my shortlist ends. Than maybe we could add some areas where there is
really significant two digit growth every month like PC's and pathworks. But
what about the other 99% of out price list. What about workstations, managed
networks, compilers, networking products etc. etc. etc. I don't say that these
are bad products. Actually, they are pretty good. But none of them good be
classified as the #1 market leader in their segment. But correct me if I am
wrong.

When is the cut off date that we decide that because something didn't make it to
the #1 or #2 position, we'll stop with it? Another year? 5 years? 
Unfortunately, if Palmer really would stick to his point today, I guess we would
be reduced to a 10.000 employee (or less) company. 
Difficult decision.... Well, times are hard for everybody...

Timo

    It is -possible- that COGS increased because there was actually more
    product manufactured, sold, and shipped. But, due to competitive and
    selling pressures, it might have been heavily discounted and
    allowanced. Thus, revenues showed a decline. Only way to know would be
    to compare gross and net revenues for comparable periods.
    
    It is most difficult to determine what is really going on from this
    level of reported numbers.

    We are looking at and commenting on the shadows on the wall of a cave. 
    Only Palmer and the SLT know the true reality of Digital.
    
    

    
    Re: .148
    
    >>RE: It is also the individual contributors whoms groups do not add 
    >>    any "EXTERNAL' nor internal value. These groups perpetuate their 
    >>	own existance with paper work, political games, and mis-information.
    
    > So... you say it is the "individual contributors" who is at fault for
    > this problem..... The "individual contributors" is merely doing as
    > he/she is instructed to do, by management... If he/she was to do more
    > or less, he/she would be fired.... It isn't the ICs job to determine if
    > his/her job is adding value to the company..
    
    Wait a minute.  He didn't say individual contributors are the ones at
    fault.  That's just the story you choose to tell about what he said.
    Read it again.
    
    As to your comment, "management" frankly is totally incapable of
    screwing up Digital without help.  They can't do it alone.  Digital
    is in the mess it's in because lots of individual contributors over
    the years have chosen to collude with management.  Ultimately the
    buck stops with each of us.  I disagree 1000% with you that ICs
    have no responsibility to determine whether their jobs add value
    or not.  That kind of thinking is why we're in the mess we are in.
    Either you're part of the solution or you're part of the problem and
    the choice is YOURS.
    
    Steve
    
     

            <<< HUMANE::DISK$NOTES:[NOTES$LIBRARY]DIGITAL.NOTE;1 >>>
                        -< The Digital way of working >-
================================================================================
Note 3000.158       Digital Reports 3rd Quarter Oper. Results         158 of 161
SNOC02::STIRRUP                                      18 lines  20-APR-1994 01:04
                         -< That cost of sales issue >-
--------------------------------------------------------------------------------

Would somebody who really knows, please answer what several folk have asked -
why is the  cost of sales figure significantly increased in these results.

I would love to know what is actually included in the figure.

My undersatnding is that COGS is the cost to manufacture or buy the stuff we
sell. It does not  sense for this number to be increasing when we hear about
improvements in manufacturing etc.

I find it particularly intriguing because in the subsidiary here we are being
asked to cut SG&A.

Nothing wrong with that, but if COGS is going up, we buy from corporate, hence
have no control over our gross margin before SG&A.

Makes it tough for our management to run their business.

A confused, and trying to be positive about the future employee.

Chris S.

    Quote form a Morgan Stanley economist in this weeks Time magazine:
    
    "My darkest fear is of macho corporate managers who will slash and
    burn, and will not make a true commitment for the longer haul to expand
    their market share through judicious rebuilding. Then we will have
    hollow industries that will undermine our competitive advantage over
    the long haul, and that will be an unmitigated disaster for growth and
    jobs."

>    because the guy on the street doesn't even know who we are.  When I 
>    read a recent USA Today article on PCs it indicated the Top 10 PC
>    manufactures and DEC was NOT one of them.  I wish DEC would quit
>    patting ourselves on the back on how well we are doing in the PC
>    business because retails stores outside of New England don't know who
>    we are.
>    
>    Second, here is part of a recent VNS summary - Layoffs won't be
>    insignificant and it will be in the general sales force.  My comments
>    are: ???? Who's going to sell if we don't have a sales force?
>    Distribution cannot do it all.

    Granted that Finland is a small market, but in any case in
    Finland I think about 85% of the PC's are sold throgh channels
    (distributors, superstores), and the rest through DECdirect,
    and virtually nothing by Digital sales people.
    
    The marketshare of DECpc's in Finland is around 9-10% of all
    new PC's sold and Digital is in the top 5 PC sellers in the country.
    
    It is a model that seems to work rather nicely (others do the selling,
    Digital gets the money; kind of like what Microsoft is doing with
    Windows NT - others sell and support and Microsoft gets the money ;-)
    

    ...petri
    

To add to Petri's note, Finland is the home base of ICL's PC development
and manufacturing. This means that apart from IBM etc. Digital has a
strong home grown competitor as well.

--Ritva

RE:    <<< Note 3000.161 by QBUS::M_PARISE "Southern, but no comfort" >>>

>>    We are looking at and commenting on the shadows on the wall of a cave. 
>>    Only Palmer and the SLT know the true reality of Digital.
  
     Good point.  As far as we know, our corporate performance may very 
     well be going precisely according to (someone's) plan.

                                   Greg

    EUREKA!!!
    
    Finally figured it out.
    
    Ken Olsen is somehow driving share prices down in an effort to
    buy enough (with the help of some outside financing) stock that
    coupled with his own bizillion shares would make him the majority
    stockholder.  Then he will.........sorry must go.  A couple of guys
    say they have something for me.  Its a jacket.  A white jacket with
    sleeves down to the ground.  They must want my tailors name.  Back
    later.

     
     When circumstances force one to consider alternatives outside of
     the generally accepted areas, one must face the possibility of being 
     called paranoid by those lacking the courage to even consider the 
     possibility.  True intellectual integrity demands that one be willing
     to accept such cheap shots in the pursuit of discovering the reality
     of the situation.

                                    Greg

    re.158
    The CGS could be rising because we have to sell more units to achieve
    the same level of revenue.  In other words, we are shipping more units
    of a lower price to make the same gross sales number.  More units means
    more manufacturing costs.

    CGS  MAY BE UP BECAUSE OF THE PRODUCT MIX.  EACH PRODUCT HAS A
    DIFFERENT UNIT COST TO PRODUCE, BUT WITHOUT MORE DETAILED INFORMATION 
    IT IS DIFFICULT TO TELL.  ANOTHER POSSIBILITY IS WE RECOGNIZED EXPENSES
    WITHOUT RECOGNIZING THE REVENUE.  DISCOUNTS AND ALLOWANCES SHOULD NOT
    AFFECT YOUR COSTS OF GOODS SOLD LINE.  EVEN THOUGH COGS IS UP, MY
    BIGGEST CONCERN IS THE FINISHED GOODS INVENTORY.  DOES ANYBODY HAVE
    LAST QUARTERS FINISHED GOODS INVENTORY NUMBER OR EVEN LAST YEARS.   

Answer to .171

I have the balance sheet numbers as at Q2FY94.

Inventories: Raw Materials	403,800,000
             Work in Progress	606,630,000
	     Finished goods	939,926,000
	       TOTAL         			1.950,356,000

This is approx. an 11% increase.

Maybe we are expecting to ship huge quantities this quarter.

Let's hope you are right on COGS, and have recognised some expenses
before getting the revenue.

Another interesting number is DSO up from 77 to 81. 
Does not help cash flow.

Take a look at employees OTHER up from 4800 in Q2 to 6300 in Q3.

Interesting, regards Chris S.

    re: .172 and DSO increase ...
    
    This is usually a very clear indicator of a drop in both the customer's
    satisfaction level, and the quality of products ship. Bad news.
    
    Customers don't pay when we ship them incorrect or incomplete orders.
    Customers don't pay when we ship stuff that doesn't meet expectations.
    Customers don't pay when we don't ship ...
    
    Geoff

>    We are looking at and commenting on the shadows on the wall of a cave. 
>    Only Palmer and the SLT know the true reality of Digital.
 
    You're right mister Platon but do you really think a bit a light would
    make us blind? Since Friday I'm waiting for some decision/action which
    would let me feel a bit less in the darkness. The only thing I hear
    is that more prisoners will be let out under the dangerous light of
    the sun.     

           <<< Note 3000.174 by GVAADG::PERINO "I assumed it was implicit"
    >>>
                                    -< In the dark >-
    
    >>>You're right mister Platon but do you really think a bit a light would
    >>>make us blind?
    
    	The only light we have is:- More cuts of headcount is coming!
    
    	No wonder we are being treated as "blind."
    
    				Malcolm.

    The Financial Analyst who presented the results to my group yesterday
    said that the results of employee layoffs and facility restructuring
    has removed 2.8 billion dollars out of the companies on-going cost
    structure. She expressed concern about cash on-hand and the danger of
    not meeting payroll in the future.

    This information really brought the problems into focus.

    FWIW,
    JR

    	It's quite simple. We are getting rid of head-count, and doing
    exactly the same job as we always used to do. The way we manage to do
    the same job is by outsourcing.
    
    	A typical example of this is that we used to have a photocopy room
    in Valbonne. The staff were TFSO'd (at significant cost) and employed
    by a local photocopy company that DEC contracts to. It is exactly the
    same staff, doing exactly the same work. The only difference is that
    now there is a middleman taking his cut. I have seen the same thing in
    training, software development, technical support, ...
    
    	Since downsizing, and outsourcing things that are not our core
    competency are the right things to do, then this is obviously the way to
    go, even though it is costing us TFSO money in the meantime.
    
    
    	Seriously, it is possible to be overstaffed in particular areas,
    but those need to be carefully identified. It is possible to replace
    some people with machines, but this tends not to work too well in a
    range of areas from sales to office cleaning, and wherever you do this
    you must expect to put the capital investment into the machines in
    advance of getting rid of the people so that you have a changeover
    period to verify the idea. Outsourcing works if the company you are
    outsourcing to can achieve economies of scale by spreading costs across
    other customers similar to yourself, and is prepared to let you have
    some of this cost saving.
    
    	With the above reservations, if you cut your staff, you cut your
    business. If you halve the number of professional tennis players you
    don't get more efficient or profitable tennis tournaments, you just get
    less of them. Or maybe you think cutting the number of professional
    tennis players to 1 would be perfect since the player to
    cost-of-tournament ratio would be infinite?

    The problem is, we really haven't been getting rid of much headcount. 
    In the past, each time there was a layoff, a large percentage of the
    people who were TFSO'd found other jobs within Digital through the good
    old boys network.  

    re. 178
    
    The Los Angeles Times in their article on the loss last weekend
    reported that at one time Digital (Dec) employed a high of 140,000
    people. And it is now, what, around 87,000
    
    That's a lot of people overall. But now....with what happened
    it may pick up the pace again.
    
    
    

	No, the real problem with Digital is that we are not growing
	revenue, only cutting headcount. Until Bob and the SLT figure
	out a plan to bring in more $$, heads will continue to roll.

	Plain and simple: It's the $$ coming in stupid.

						mike

    Stock going to 15.... At 19 now.....any buyers?
    

Subject: Shareholders Sue Digital
Date: Thu, 21 Apr 94 6:30:09 PDT
	
     BOSTON (AP) -- Angry shareholders have filed at least five
lawsuits against Digital Equipment Corp., claiming that the
computer manufacturer duped them into buying stock just days before
the company announced a massive quarterly loss.
	
     A class-action suit was filed yesterday in federal courts in
Boston and New York on behalf of thousands of shareholders who
bought $400 million worth of depository shares issued by DEC last
month.
	
     A depository share represents ownership of one-fourth of one
share of Digital Series A 8 7/8 cumulative preferred stock.
	
     The Maynard-based company announced a $183 million,
third-quarter loss last Friday, far worse than analysts had
predicted. On Monday, news of the loss drove the share price down
to $20.50 from the offering price of $25, a drop in value of almost
20 percent, or $80 million.
	
     Digital spokeswoman Nikki Richardson rejected any allegations
that the company misled investors.
	
     She said the lawsuit "is without merit and we intend to defend
it vigorously."

    To think COMPAQ stock today is at 101 and all they do is make
    computers. No service organization, networks, software, etc.
    They must be focus on making money.....Stock will hit 15

    The fact that Palmer (and others at the top) were "surprized" merely
    proves how out of touch with reality they are.
    
    tony

For a company that has more computers than Carter has liver pills, I am
amazed that we can't keep track of the business we're doing day-by-day.
(Either that or we are and someone's not "Doing the right thing...")

	... thought we weren't being open with them, they would barbeque us.

	... bad finacial news. The barbeque I'm talking about would be like
late '83, when Al Bertocchi(sp?) was CFO, and the Street was convinced he was
not being forthright with about our forecast results every quarter. They
effectively ran him off the job. And the news then was mostly GOOD!

    Um, I don't buy for one minute that *someone* didn't know how bad our
    Q3 results were going to be.  If you're expecting a $20m - $30m loss,
    and you post a $183m loss, the Delta is too blessed big for someone not
    to have known about it!!!  If you believe anything else, I have this
    bridge in Brooklyn I can sell you, cheap!  We have enough high-priced
    financial wizards floating around that someone should not only have
    known about this financial bombshell, but should have sung out a long
    time ago...  either that or alot of someones are asleep at their
    watch...  and we just hit an iceberg.
    
    Mutter...
    
    /m

>>If you're expecting a $20m - $30m loss,
>>    and you post a $183m loss, the Delta is too blessed big for someone not
>>    to have known about it!!!  If you believe anything else, I have this
>>    bridge in Brooklyn I can sell you, cheap!
Id be interest. Would you consider trading it for some DEC stock?

    Re .190 
    
    British Aerospace posted a 400 million (sterling) loss for the year a
    few back.  The CFO lost his job because he didn't know about it until
    about a week before the board meeting to approve the annual accounts
    for publication.

What this company needs is a good 'Love Boat' Captain to look like their
steering the ship but really does nothing...

I was thinking of maybe Howard Stern ... he's kinda busy running for
Gov of NY but this might be a more interesting challenge for him.

Let me see ... he could ...

	o sell the mill and give every employee $xx...
	o give every VP really extented vacation time

    I've heard a rumour saying that due to an oversight in Q3, $500M of
    revenue was not accounted for in the results.   Hence management
    surprise at the figures....
    
    Can this be substantiated ?
    
    -Dave.
    

    I heard $80M, but this was back about a month or so...
    

    This sounds like RCA back in the seveties.  A 100 million dollar
    accounting error was the straw that broke the camels back.
    
    RCA was the previous owner of MRO1.
    
    Deja vu all over again
    
    

    It seems that we have gone from blaming our losses on world-wide
    economic conditions to unshipped product left on the dock at the end
    of the quarter.
    
    Larry

    Larry,
    
    Where did you hear that ? Or is that the latest Rumor de jour ?

Can someone help me in understanding how we can downsize the sales organization
to the level we have, undergo all sorts of cost savings programs like limited
travel and no raises etc. and still show on the quarterly report an increase in
the cost of sales to sell less product? Where are the savings? Why spend 1.2 
Billion dollars to downsize and restructure if your costs are not going to go 
down. Our revenue sure will!!!