Conference 7.286::digital

    I personally don't believe that discussion of a possible takeover
    of an other company is a good idea in this open a conference. 
    
    			Alfred

    re: .0
    
    Can you say "anti-trust"?

   How the principal itself is valid for discussion. I am of the opinion that
   one of the best ways to survive a recession, is the judicious acquisition
   of "struggling" smaller companies. i.e. We could pick up Wang or DG for a
   song, keep most of their field support people in place, fire their slaes
   organization, and devote their engineers to working on brand-x to Vax or
   Vax/Risc migration technologies. We would pick up a few billion dollars
   worth of installed base, that would be ready to migrate soon after the
   recession starts to recover, if not before.
   
   An interesting observation with regard to NCR and .0. I recall a Customer
   who had a large retail chain. VAXes in Central IS, and NCR Cash registers
   in the stores. THey wanted to  buy several hundred small vaxes to place in
   the stores, because we didn't have anything off the shelf that talked the
   Cash registers protocol, and the account rep didn't think that CSS would
   be interested in a custom solution...
   
   sigh...

    2 + 2 doesn't alsways equal 4 Sometimes it equals less than the
    individual.
    Especailly in buyout and mergers..
    
    I worked for Honeywell Information Systems when they bought out
    General Electrics computer business.. I don't think Honeywell
    is involved anymore What do they call it Bull..
    
    What about Burroughs .... Unisys...  
    
    
    Buyer beware!!

    The discussion of potential acquisitions by Digital is fine as
    long as no one represents themselves as having non-public information
    regarding Digital or target companies.

    High technology acquisitions have had a tough time.  It's hard to think
    of one that has really worked well since the 70's.

    One problem is the "assets go home at night" problem.  There's quite a
    bit discussion of what really are Digital's assets.  Nominally it is
    "cash", but plenty of companies have that.  We've got engineers and
    patents, product lines and sales and service people, and customers.

    "What does Digital need" is the question to ask, not "What need of
    Digital does a Digital acquisition of NCR satisfy"

    We'd better be careful...they might buy us out.

    
    Why not THE merge of the century ... Digital Business Machines?

>    Why not THE merge of the century ... Digital Business Machines?
    
    The US government thought IBM was too big once and tried to break them
    up. What makes you think they'd allow the two largest computer
    companies in the world merge?
    
    I agree with Pat that most of the big computer mergers haven't worked out
    too well. There hasn't been enough of one company having the pieces the
    other was missing. I don't see much good in Digital merging with
    someone else now. What problem would that solve?
    
    			Alfred

  RE: <<< Note 1321.8 by CVG::THOMPSON "Does your manager know you read Notes?" >>>

>    What makes you think they'd allow the two largest computer
>    companies in the world merge?
    
         We must stay current now.  DIGITAL is no longer number 2.
    
                                        Greg

    RE: .9 A temporary condition at best. I remember the Unisys merger
    as well. We didn't stay behind them very long I don't expect us
    to stay anything like third long enough to get in the habit of
    thinking of us not being second.
    
    		Alfred

re .10:

The merger that made DEC #3 has already happened, hasn't it?
ICL and Fujitsu (or was it Hitachi?).

    Ayup, happened three months back.
    

    Rather than buy NCR (let AT&T have em), why don't we buy Digital?  Jeff
    Vinyard has an intriguing idea about the employees all getting together
    and buying DEC stock now that $100 will buy almost 2 shares. Then we
    could let Ken be Ken and be free of the myopic pressures associated
    with only  measuring a company by its quarterly profits.
    
    Better to buy a company we believe in,
    
    Roger

>    Rather than buy NCR (let AT&T have em), why don't we buy Digital?  Jeff
>    Vinyard has an intriguing idea about the employees all getting together
>    and buying DEC stock now that $100 will buy almost 2 shares. Then we
>    could let Ken be Ken and be free of the myopic pressures associated
>    with only  measuring a company by its quarterly profits.

The 1990 Annual Report (page 26) indicates that there are 122,555,000 shares 
of common stock outstanding, about 124,000 employees at year-end,
and about 93,000 stockholders.
Presuming that a proxy block of about 50,000,000 shares would be needed
to leverage control, and that perhaps only half of the employees have both 
the wherewithal and ability to purchase and hold any significant number
of shares, how do we manage an "employee buyout?"
How many of us can or do hold 1,000 or more shares?
And what mechanism do we have to allow the block to be spoken for in unison?

But then, Avis (rent-a-car) advertises itself as "employee-owned."
How do they do it?  (And what do they do?)

- tom]

    I make this statement several times a year: For the sake of the
    financial security of you and your family do not invest any large
    percentage of your savings which you can't afford to lose into a volatile 
    stock like Digital.
    
    If employees were to accumulate a controlling block of shares, the
    price would rise, and along the way up, some employees would elect to
    take profits and then the non-employee number of shares would increase
    offsetting the gains made by the employee-hold block.
    
    In any event, an entity with a market value of $7 billion is a bit hard
    for 120,000 people to swallow.  I don't have a spare $58,000, do you?
    
    As for Avis, Avis was not a company so much as it was a token passed
    around conglomerates like ITT, WesRay, and Norton, and so forth. 
    Rather than selling Avis again, the investment bankers thought up this
    novel approach of selling the equity of the company to the employees.
    Avis doesn't trade publicly anymore. 

    I agree...I wouldn't invest a dime in Digital right now.  Also, would
    be very afraid of letting "Ken be Ken".  That's how we got in this
    damned mess.
    
    I don't share the optimism that we will ever regain the #2 slot.  The
    Japanese are simply going to have us at # 6 or so by the end of the
    90's if not sooner.

    RE: .16 Hey, feel free to give up if you want but do try not to
    drag the rest of us down all right? We can be #2 again very quickly.
    I for one have gotten some new confidence in the company in recent
    months. Jack Smith's support of employee involvement, talk of 
    improving the open door policy, admission of the salary structure
    being low (and something being done about it), what I know of the
    development that we continue to do all make me believe that the tools
    are there. A little more commitment to quality and visible support
    for better customer service and we'll be on our way in good speed.
    Assuming the really big staffing cuts come in management not in 
    direct service and engineering areas.

    Well maybe it's a little more complicated then that but Jack Smith
    seems ready willing and able to do what it takes. And Ken, who got
    us quite a ways thank you very much, seems to be behind him.
    Yes there is a ways to go but as long as management is not afraid to
    admit mistakes and take corrective action I see reason to be
    optimistic.

    		Alfred

.17>    Well maybe it's a little more complicated then that but Jack Smith
.17>    seems ready willing and able to do what it takes.

    I work in T&N Engineering (Australia).  Right at this point in time we
    have no direct manager.  Our organisation moved from Sydney to the Gold
    Coast (1,000kms north).  Our engineering manager elected not to be in
    the move (along with a few engineers).  Due to one of Jack Smith's
    initiatives (placing a head count on the WHOLE of engineering) we have
    not been able to replace these people.

    I would have thought that if you are to make it through tough times
    then you should ensure that we have the best products etc., hence
    engineering should not be restrained.  Sure, examine the products
    under development, and ensure that the right ones are being produced,
    but don't use such a lousy "management" method as head count across
    the whole of the organisation to achieve "control".

    If Jack Smith seems ready, willing and able to do what it takes, then
    in my opinion he should take early retirement!

    When I first joined this group I thought that Digital was attempting
    to do the right thing by its partnership agreement with the Austrailan
    government, but now I see you Americans are giving us the same treatment
    you gave the indians in the Manhattan Island deal, you are buying us
    out for a few blankets and trinkets.

    Bryan

    PS  This note appears to be going down a rathole, if anyone is
        interested in a discussion of buyouts, then they should check
        out a couple of the later notes in NODEMO::MARKETING.

    Agree that J. Smith talks a great game. b-b-b-but when is he gonna DO
    something?
    
    Still feel though, that as a private individual looking forward to
    retirement, that DEC stock is an extremely risky "investment".  Not
    a dime!  By no distortion of any perceived sense of owed loyalty to
    DEC am I required to be stupid or through my money away.

    r.e .18
    
    >Due to one of Jack Smith's initiatives (placing a head count on the 
    >WHOLE of engineering) we have not been able to replace these people.
    
    Dont tell me you were caught by this too Bryan? We were a new SWS/E
    group of 5 Engineers and a technical writer (again in Australia, but
    that's probably not that relevent). We were charted to develop
    applications (you know, the bit of the OSI above the Session level that 
    has all the value-added but which very little is done in Digital). 
    At the end of out FIRST project we lost two engineers to the outside world,
    a head freeze went on and our group was stuck twiddling its thumbs. Senior
    Engineers were stuck doing work normally carried out by lower people
    for twelve months. Was this decision of the Gods in the interest of the
    company? In no way, its too broad a policy implement to wield an axe
    when doing micro-surgery. The CSS group we have merged with as part of
    EIS is great at the hardware end, but we still believe the profits are
    in the Applications end of the show. Surely in two years this reality
    is more so, not less?
    
    Bryan's case is the same again. This group is building the Ultrix Comms
    products Digital needs. Their projects are funded and experienced
    project managers have worked out what needs to be done to deliver them.
    Then along comes the Giant stomping all over the beans that Jack is
    trying to grow, an arbitrary head freeze here, another resource cutback
    there. These people have had to make their business case, fight for
    funding, ect. Ken Olsen in the DVN stated that budgets are sacred. He 
    should have said that resources are sacred once the business case has
    been made so big men with big feet dont go stomping on the people who
    are doing real work to get us out of this slump.
    
    The problem is that groups need a certain critical mass to function,
    despite their importance or operation. We should understand that
    critical mass as part of the job of managing our resources. We should
    be sure that we do not kill groups by arbitrary thuggery from Senior
    Management above. If we are willing to kill a group by such means
    surely we should realise that other forces would have wiped them out
    before now if their existence was not warranted. In most cases it will
    be the new groups working where the demand is who are not up to optimal
    resource capacity yet that will be hit the hardest. Groups in decline
    or with a lot of fat will have plenty of margin to buffer the effects.
    The question has to be "Who do these freezes target?", the answer is
    they target the broad indicators (i.e staff levels, revenue per
    employee) rather than the specific indicators (group level productivity 
    as a funtion of size ect). It like using Monetary policy to solve
    economic problems, it causes many side-effects (like killing all the new
    businesses that have the innovative ideas to get you out of your
    problems later on).
    
    I proposed a solution to the Employee Involvement. We have job models
    for employees which should identify the level of skill needed to carry 
    out a particular function. I suggested we apply the same technique at
    the group level and ascertain what is required for an Engineering group
    (for instance) to function in terms of the MINIMUM amount of people,
    tools ect it needs to do its job. This would be on the increasing
    returns to scale part of the productivity function. Groups caught in a 
    resource freeze (people or equipment), could grow to their minimum point 
    so they can get on with doing what the Corporation brought them into 
    existance for in the first place. 
    
    Others above this level would have to make a very good case for
    adding ANY staff while the freeze is on. 
    We seem to concentrate on the maximum people a group can have through
    head caps ect. My argument is that that cap should make an attempt to
    be at or just beyond the most efficient point of the group i.e at the
    point of maximum returns to scale. At present caps are applied with
    what looks like a good number rather that with what industry data would
    tell us is a more optimal size for the group of a particular function.
    We then have a range in which we know we are getting returns on
    investment and would prefer to be in. Below it, the productive capacity
    of the group stalls, above it extra investment may actually be counter-
    productive. Its basic Economics from any text book but its not being
    practised here.
    
    Oh yes, my idea, was sent to IDEAS CENTRAL in June, I received a note
    saying it had been forwarded to the U.S Personnel manager. I received
    no word so I queried them in December. Its now been forwarded to John
    Simms, again no word yet. I thought the Involvement system was more
    than an automagic mail forwarding system, now I'm not sure.
    
    Jack and the Committee should really be attentive to the way they make
    decisions. At present their "blunt instrument" approach is not
    resulting in QUALITY decisions that will help us out of the mire. If
    they fiddle with the indicators it should be in a way that is better
    thought out with due regard to the mechanics of the systems they tinker
    with, not just the dials they are reading. Its sort of like changing
    the calibration on a speedometer to prove you have an increase in
    speed (i.e fixing the REVENUE/EMPLOYEE problem --> get rid of employees
    rather than improving revenue or better allocating the employees, or
    looking at how other companies use 3rd parties which dont reflect on
    the corporate figures). I dont hold to the "At least they are doing
    something!" argument. Jack has a mandate to get the company back on the
    rails, NOT to just cut costs. He should ensure his very big knife does
    not do some of the damage I've seen it do in the past, for all our good.
    
    
    John S. Baker
    EIC/Engineering, Sydney
    

             <<< ASIMOV::$1$DUA7:[NOTES$LIBRARY]MARKETING.NOTE;1 >>>
                   -< Marketing - Digital Internal Use Only >-
================================================================================
Note 1282.13                     ICL and Fujitsu                        13 of 17
YUPPIE::GILPATRICK "Jim Gilpatrick"                  28 lines   2-JAN-1991 09:49
                     -< DEC is still world's #2 (for now) >-
--------------------------------------------------------------------------------
    This listing is from the December 22, 1990 issue of The Economist.  As
    we rank-order the world's largest computer companies and rank
    Fujitsu with ICL ahead of DEC, perhaps we forget that Fujitsu does not
    get 100% of its revenue from computers.  Fujitsu also sells a lot of
    telephone gear and other things.
    
    The world's top computer makers as reported in the December 22, 1990
    issue of The Economist of London. (Sources: McKinsey & Co.; Morgan
    Stanley Capital International, company reports)
    
    	Company		Computer Sales
    	 Name		  1989, ($B)
    	-------		-------------- 
    	IBM		     57.3
    	Digital		     12.9
    	Fujitsu		     12.3
    	NEC		     11.5
    	Unisys		      9.3
    	Hitachi		      9.3
    	Hewlett-Packard	      8.2
    	Groupe Bull	      6.5
    	Apple		      5.4
    	NCR		      5.2
    	Olivetti	      4.9
    	Siemens		      4.7
    	Toshiba		      4.6
    	Compaq		      2.9
    	Matsushita	      2.8