Conference 7.286::digital

                       -< What can we learn from Wang? >-
    
    you can't make it in MA.

    re: .0
    
    WANG has stated that the early payment of salary was due to the
    adoption of new payroll software. However, the same news report also
    talked about the LONG delay in reporting earnings.

    A lot of Wang's problem is that it was a family dynasty for a long time
    and friends who have worked for Wang had nothing good to say about Dr.
    Wang's family member who was in a high place who did a lot of damage
    and little good.
    
    
    

    
    	Wang was slow to adapt to changes in the marketplace.  Wang's
    	success was largely based on their early leadership in the
    	office marketplace when that market was based on selling
    	dedicated hardware systems to do tasks such as word processing
    	and so forth.
    
    	When those tasks became software applications that could run
    	on a number of hardware platforms and became readily available
    	on PC's at a very low cost, Wang rapidly lost their competitive
    	advantage in that market.
    
    	Since that time, they've been grappling to find another "niche"
    	in the market to hold on to, because with their revenue base,
    	they obviously can't afford the R&D investments to remain
    	competitive as a broad-based player in the industry.  Several
    	other companies (DG, Prime, etc) have all been in a similar
    	dilemna.
    
    	What can we learn from that?  We've got to be quick to anticipate
    	change in the market and react to it.  The kind of gut-wrenching,
    	painful restructuring that is going on right now is a result of
    	not making changes fast enough.  Digital has a long history of
    	waiting till we feel some pain before making any change instead
    	of anticipating the need for change and making it more proactively
    	rather than reactively.
    
    	If we don't change that, it can become a continuous downward
    	spiral that you never get out of, because by the time you've
    	reacted to one change its too late to correct for that one
    	and the next change is already on top of you.
    
    	The first massive change that has hit us over the last few
    	years I believe has been due largely to the impact of PC's
    	on many of our traditional market.  We've been slow to
    	recognize that trend and assumed that people would continue
    	buying our larger systems, when in fact, in a number of
    	cases they could do the job a lot cheaper on PC's.
    	
    	We're still reacting and trying to get caught up with the
    	impact of that change and the next massive change is beginning
    	to hit us which I believe is movement away from proprietary
    	operating systems towards open systems.
    
    	Hardware is already a commodity in the low-end and software
    	is following right behind it....in the very near future we
    	may see our primary competition as companies like Intel in
    	the hardware marketplace and companies like Microsoft in
    	the software space.  Are we prepared to compete effectively
    	at that level?
    
    	I think Bob Palmer certainly recognizes that and we really
    	need his kind of leadership to help us get ahead of some
    	of these changes.
    
    	Chuck
    

    There's a new (I believe) book out about the rise and fall of Wang
    Labs; title is /Ride the Runaway Horse,/ but, sorry, I cannot recall the
    author's name.  Needless to say, the book is timelier than ever right
    now.
    
    A good friend (NOT in the computer industry but a PC user) has been
    reading it, and gives it excellent reviews.  At last report, she had
    not got as far as the company's decline, though.
    
    Just thought I'd mention it...anyone reading it?  (It's certainly on my
    list; would borrow hers but it's from a public library.)
    
    						Steve
    

    Opinion follows:
    
    In 83-84 or thereabouts, PC's started eating into Wang's bread and
    butter word processing business. Meanwhile the steady stream of 
    hardware service revenues began to dry up due to 3rd party providers
    and continued improvement in hardware reliability.  They had a lot of
    research products going, trying to find the one that would replace word
    processing. When number 1 son (Fred Wang) took over from The Doctor
    around 1986 or so, he basically borrowed a ton of money to keep all 
    those projects going (obviously, he expected that they would return to 
    the days of consistent 40% quarterly growth). 
    
    Well, they didn't find the product that would save them, leaving them
    with lots of debt and a still-declining revenue stream. So Rick Miller 
    (the GE executive, not the former Red Sox reserve outfielder) comes in
    and  slashes the expenses. It doesn't work, so he does it some more.
    Finally, the desperate sellout to IBM that would either save or kill
    the company. And we all know what happened. 
    
    So, what should we learn? I think it's this: We need to start making 
    money in the current worldwide economic environment before we go into 
    debt. Easier said than done, but I believe that we can do it, under 
    Palmer. 
    
    Now, if KO had picked his kid to run things, I wouldn't be as sure of
    that...
    
    
    Greg 
    (Wang Labs 1982 - 1987)
    
    

    
    Re: .5
    
    The book is called "Riding the Runaway Horse...The Rise and Decline
    of Wang Laboratories".
    
    I finished it a couple of weeks ago, and it is *outstanding*.  It
    is also a sad commentary on the relationship between a father and son, 
    and on a once-proud company brought low because of (principally) the 
    father's faith in that son.
    
    I think there are lessons to be learned.  The author (sorry, can't
    remember his name, but he's a writer for the Globe), points out
    one or two major turning points.  One was the rapid promoting
    of Fred Wang to positions that many excutives felt he wasn't ready
    for (or even particularly interested in).  Another was a disastrous
    product announcement in 1983.  The company held an announcement
    press conference in New York in the fall of 1983; they had *no*
    products related to that announcement -- completely vaporware.  It
    took them almost two years to produce the products they announced
    at that time.
    
    John Cunningham, at least from the author's portrayal, was the hero
    of the story.  When Dr. Wang promoted Fred to head of R&D (early
    1983, I think), Cunningham sold all his stock ($10M or so), knowing
    as he did so that the Doctor would see it as the ultimate in
    disloyalty.  It turns out he sold his stock at $.10 off the peak that
    Wang ever attained.
    
    There are lots of insights into the company.  One of the more important
    was the sense of the Doctor's obsessive need to control the company
    (hence the Byzantine Class B, Class C stock structure), and
    the heavy borrowing (as opposed to offering equity to raise capital).
    
    
    I highly recommend the book.
    
    Glenn (who was there in 1979)
                                                               

    Charles Kinney is the name of the author of the Wang book.  He used
    John Cunningham as his prime source, so JC does come out looking good.
    I think the Wang Lesson is : When the founder shows signs of founders
    disease, take h/him out of the picture.  The Doctor was determined to
    beat IBM (sounds familiar?), hence the disastrous Ocotber 83
    announcement. Also he wanted to pass the business off to his son, a
    lightweight in every respect. When i was there (l983-88), one of the
    best stories was when the R&D team showed Fred a standalone PC, with
    graphic user interface, mouse, etc, that would network to other
    computers.  Fred, then VP R&D, (circa 1983-84) killed the product, saying,
     "we are the worlds best word processors, we don't need this" The R&D team
     resigned en masse and went to a california company then trying to make it
     big in the corporate market - Apple.  People swear it was true.  
     tjk

Read in my newspaper this morning that IBM has pulled the plug on Wang and
Wang is now expected to file Chapert 11.

jb

                <<< PEAR::DUA1:[NOTES$LIBRARY]SOAPBOX.NOTE;1 >>>
                     -< SOAPBOX: Not So Humble Opinions! >-
================================================================================
Note 987.0                    Wang Labs goes Ch. 11                   No replies
TENAYA::RAH "I can bone my own salmon"               66 lines  18-AUG-1992 12:06
--------------------------------------------------------------------------------

	LOWELL, Mass. (UPI) -- With its stock falling through the floor and
its debts mounting, Wang Laboratories filed for bankruptcy protection
Tuesday and said it would cut 5,000 more jobs from its already
streamlined work force.
	The once high-flying high-tech company announced the filing about 10
a.m., confirming published reports earlier in the day.
	Richard W. Miller, chairman and chief executive officer, said he
hoped to avoid Chapter 11 but felt the filing was the only way Wang
could finish the restructuring it needs to reverse its fortunes.
	``This is a drastic step that I deeply regret,'' Miller said. ``But
it is one that is absolutely crucial to our company's survival and the
preservation of thousands of jobs. I want to stress that this action
will allow Wang to remain in business and move forward with its recovery
plan.''
	Miller said Wang would continue to service its customers while it
restructures its debts and operations. He predicted the company would
emerge from Chapter 11 as a ``smaller, more focused and more competitive
company, with revenues of about $1.4 billion compared with $1.9 billion
now...''
	Miller also said the company would cut its work force from its
current level of 13,000 to about 8,000.
	Wang also reported its long-awaited fourth-quarter results, which
normally would have been posted in July. It reported a net loss of $116.
3 million, or 68 cents a share, compared to a net loss of $314.5
million, or $1.88 per share, in the same quarter last year.
	Its net loss for the year was $139.2 million, or 82 cents a share,
compared to $385.5 million, or $2.31 a share, for the previous year.
	``For the past three years, in the face of recession and continuing
upheaval in the industry, we have fought to bring Wang back from the
brink of bankruptcy,'' Miller said. ``We came very close to making it.
We simply ran out of time.''
	Miller said Wang's quarterly revenues have essentially stabilized
between $460 million and $500 million over the past six quarters. But,
he added, the company could not handle the cash drain from restructuring
charges totaling more than $1 billion.
	Wang was founded in 1951 by Dr. An Wang, a Chinese immigrant who
invented the magnetic computer memory. The company was a major player in
the high-tech industry, but began slipping in the mid-1980s.
	The downfall came when the industry shifted away from the
minicomputer and proprietary systems that Wang offered toward smaller
personal computers or open systems that accommodate varied vendor
technologies. By the late 1980s, Wang began reporting heavy losses.
	An Wang, who died in March 1990, hired Miller two years ago. Miller
previously ran General Electric's consumer electronics business.
	His management team was able to retire $575 million in debt, as it
accepted heavy restructuring charges. It also launched a new Office 2000
strategy for growth, but resources and cash flow at Wang were
insufficient to avoid Chapter 11, Miller said.
	Wang still hopes that Office 2000 will help it reinvent itself as a
software and services company, he said.
	Rumors of a bankruptcy filing were rampant on Monday.
	Wang Class B stock, traded on the American Stock Exchange, which had
fallen 24 percent on Friday, shed another 87.5 cents -- or 53.8 percent --
Monday to close at 75 cents a share.
	The crunch was brought on by Wang's failure to meet conditions for a
$75-million cash infusion provided for a year-old agreement with
International Business Machines Corp.
	The Wall Street Journal said Wang could have received as much as an
additional $75 million under the deal with IBM. But IBM said that
because Wang had not met terms of the accord, it would not go beyond its
initial $25 million stake.
	IBM purchased $25 million of Wang convertible debt in June 1991 under
an agreement in which Wang agreed to market two IBM product lines.

It sure looks like IBM made out like a bandit on this one... 

For $25 million, IBM picked up most of the remaining WANG installed base. 

This, it appears, wasn't worth an additional $75 million however.

		Bob Cohen

    I ran into a friend of mine who left Wang just over a year ago.  She
    said she reached the end of her rope when:
    
    1.  she hadn't had a raise in more than 2 years.
    2.  people around her were being laid off and their work was all being
        dumped on her.
    3.  Richard Miller gave himself a $300K bonus immediately following
        IBM's cash infusion.
    
    After she found another job and gave notice, her management asked her to 
    reconsider.  She suggested that they make her an offer.  Then -- get 
    this -- they said they wanted her to commit to staying at Wang _before_ 
    they made her an offer.  Right.
    
    Mary
    

    
    OK, a lesson learned?
    
    From my AYSO coaching days:	  The coach(es) can't win the game, but
    				  they sure can lose it!
    
    

    re .13
    
    Mary, if it weren't you telling this story, I'd check the length of my
    legs to see if one was longer than the other.
    
    Dick

    Wang dropped from over 30,000 people to around 12,000 now. An other
    5,000 are to leave soon. They're in Chapter 11. Obviously cutting 
    people to save costs is not going to save a company unless significant
    work is also done to increase revenue. That is the lesson of Wang for
    Digital today. I'm sure there are others.

    			Alfred

    Bumped into a WANG personnel staffer this morning. She mentioned that
    not many employees were surprised by the Ch 11 filing, and that most
    people were proceeding on the assumption that they would be laid off. 
    To that end, many people have been stockpiling their vacation time,
    hoping to use the extra money to tide them over as they looked for new
    jobs.
    
    HOWEVER, one of the consequences of the Ch 11 filing (or as an interim
    step leading up to it), was that WANG seized/cancelled/took/eliminated
    (choose your own verb) all accrued vacation time! This step alone has 
    done more to anger the employees than all the other doings at WANG.
    This accrued vacation was a large part of people's safety net, and now
    it's gone. No word yet as to whether it will somehow be restored.
    
    She said that if she learned one lesson during the whole time of WANGs
    troubles, it's that when push comes to shove, the company cared more
    about the bottom line than it did about the individuals. Remember, this
    comes from someone who's been good enough or connected enough to have
    survived all the turmoil and cuts at WANG over the last several years.
    
    

    Rather it seems that "caring about the bottom line" can too little and
    too late in Wang's case.

        Re: .17

>    HOWEVER, one of the consequences of the Ch 11 filing (or as an interim
>    step leading up to it), was that WANG seized/cancelled/took/eliminated
>    (choose your own verb) all accrued vacation time!

        It is unfortunate that employees stockpiled extra vacation time
        in case of a Chapter 11 filing--they obviously didn't understand
        bankruptcy.  Wang owes money to a large number of people and
        organizations, and doesn't have enough resources to pay them. 
        The employees are owed vacation time, but they must now get in
        line with the banks to get back a portion of what they are owed.

        I've know of other people who were the victims of bankrupt
        companies, and when my Wang employee friends mentioned concern
        about Chapter 11 my response was `take your vacation time'.  A
        friend of my wife worked at a company without maternity leave,
        an employee needed to accumulate sick time if they wanted time
        off to have a baby.  This woman had saved sick time for years
        and was eight months pregnant when the company went bankrupt.

        The good news:  Pay for days worked after the bankruptcy filing
        is protected under bankruptcy law.  Wang issued pay checks
        earlier than usual last week, and was nice enough to warn
        employees to cash the checks quickly.

>    She said that if she learned one lesson during the whole time of WANGs
>    troubles, it's that when push comes to shove, the company cared more
>    about the bottom line than it did about the individuals.

        I think she is being unfair.  Wang had two options--close down
        the company or reorganize under bankruptcy protection.  If Wang
        had closed down the vacation time would be lost along with all
        jobs.  Under reorganization, the employees will have a chance
        to get paid for some of their vacation time when other debtors
        are paid, and Wang hopes to keep providing jobs for some of its
        current workers.

        As for the bottom line:  The employees did much better than the
        stockholders--the employees claim for vacation time has a higher
        precedence than the stockholders claim to anything.

        IT would be much better for everyone (the employees, the
        stockholders, the customers, and the taxpayers who help cover
        unemployment benefits) if Wang had continued to be successful,
        but it was too late to save Wang in August 1992.  Some of the
        problems result from bad decisions made a decade ago (e.g.,
        promoting Fred Wang up through the corporate ladder) and some
        were beyond the control of Wang (the current state of the
        economy).

        					B.J.

    
    
      I thought employee wages  recieved priority over other creditors
    	during a bankruptcy?  (And court decisions have upheld vacation
    	time as deferred wages.)
    
      Can wang really sieze vacation time,  or is it simply frozen until
    a court approves the payment plan, at which time it would be repaid
    ahead of other creditors?
    
      Either way,  that's a really _low_  trick to pull...
    
    
    						-al
    

    Wages are first in priority.  Pensions are protected by a law called
    ERISA.

    Benefits, vacation and fringes come later in priority in bankruptcy
    court.

    RE: Last few
    
    Unfortunately, I hadn't made clear in my note that she and I discussed
    the fact that accrued vacation time was on WANGs books as a liability,
    and such was/is, in effect, frozen...either until the courts sort
    things out or forever, whichever comes first. Feeling rather
    pessimistic this morning, our conversation took the tone of "It's gone
    forever..." In re-reading my note, the verbs used to describe WANGs
    actions leave something to be desired, hence this clarification. 
    
    In any event, regardless of whether or not they ever see their vacation 
    money again, the fact remains that these folks who will likely be let 
    go over the next few days/weeks/months have lost the immediate use of
    that vacation 'money' to help tide them over while hunting for a new
    job. That's a tough blow to take, especially after having survived the
    turmoil at WANG over the last few years. I don't think many people
    realized that their vacation time was, in fact, at risk during Ch11.
    In addition, people seemed to be more focused on the consequences
    of a layoff rather than the consequences of Ch 11. Had they understood
    it, perhaps they would have used up whatever time they could before
    yesterday. Even so, they still would have lost the monetary benefit
    of a vacation-time payoff.
    
    As far as her comments that said company before people, I agree that
    it was purely an emotional remark, but understandable given the 
    circumstances.
    
    Freddie (husband of an ex 10+year WANG employee)

    RE: vacation pay
    
    From today's Boston Globe:
    
    "A few hours after filing for Chapter 11 protection, Wang's lawyers got
    the go-ahead from Judge Hillman to use about $5 million to pay benefits
    owed employees, including commissions, bonuses, expenses, vacation and
    medical benefits."
    

    RE: .23
    
    That's good news...I hope that they were given the 'official' version
    of this info as soon as they arrived to work this morning. I'm sure
    there were a lot of folks who had a sleepless night worrying about it.

    Do you kow who is the publisher of this book ?
    
    Bernard.	

    What can we learn from Wang? Well, ya gotta wonder how many Wang
    employees are still bickering about their car plans...

    Don't know the publisher, but it's widely available in any decent US
    bookstore.  I don't know if you're overseas or not, so I don't know if
    that helps you.
    
    John

>>>    Don't know the publisher, but it's widely available in any decent US
>>>    bookstore.  I don't know if you're overseas or not, so I don't know if
>>>    that helps you.

The book is in the Digital library. I accessed this info using VTX DLNCATALOG:

     Title: Riding the runaway horse : the rise and decline of Wang
Laboratories

    Author: Kenney, Charles C

      Type: Book                   Year Published: 1992        Record: 78948

  Subjects: United States; History; Computer industry; Wang, An; Wang Laborator
            ies, Inc

     Sites: LKG,MRO1,NIO

  Call No.: HD9696.C64 W364 1992
 Publisher: Boston : Little, Brown, c1992.

   Edition: 1st ed.
 Collation: 323 p. [8] p. of plates : ill. ; 24 cm.

     Notes: Includes index.

    reply to .27 and .28
    
    Thank you.I am in France, will try to get this book.
    
    Bernard.

RE:       <<< Note 2053.26 by SA1794::CHARBONND "Bush in '92 - Barbara!" >>>

>    What can we learn from Wang? Well, ya gotta wonder how many Wang
>    employees are still bickering about their car plans...

It's not post-it pads and car plans that got us into deep do-do.  

John

    >It's not post-it pads and car plans that got us into deep do-do.  
    
    Absolutely right.  It's years of myopia and non-decisions by highly
    paid yet unqualified members of unqualified committees.  
    
    Fire everyone above the rank of unit manager.  Don't say 'then the
    company will be leaderless'.. we are now.
    
    karl

    On the news this evening it was mentioned that, despite the bankruptcy,
    some 500 Wang employees are going to Hawaii for a week as a reward for
    meeting sales goals.  The total tab is several million dollars.
    

    
    Sounds like something we'd do.  In fact, they can even call it....
    "All Hands On Wang."
    

    The way I heard it, they were already in Hawaii "celebrating" when the
    bankruptcy was announced.

    L.

    An article from the Worcester MA Telegram this AM about the Hawaii trip 
was that it was cancelled last year due to problems with the hotel being 
unfinished, but that it was scheduled for this year. Wang spokeperson said 
that the trip was part of the total compensation package for their top 
salespeople and the trip was basically bought and paid for long ago, before 
Cptr 11 was a reality. To cancel it in light of the current fiscal crisis 
would have lost them millions. One estimate said the trip was costing $7M 
but a review by Wang said that was grossly exagerated. They did not give 
a revised estimate of the cost.

    My opinion, yes, they would have lost the booking cost of the trip had 
they cancelled it now, but their fiscal woes started LOOONNNGGG before they 
booked this trip.....why did they do it in the first place? 

    Does this sound like anything we do within Digital??? Can you say, COE 
kids? 

    I was twice a winner of the SWS Excellence awards in the past when 
business was good and cash was in a positive flow, but today I'm not sure 
it is a good idea....seeing it in print for Wang only leaves a question in 
my mind of what it would look like with the name Digital replacing Wang....

    Vic H

For the last time, folks....  COE is bought and paid for by the Sales salary
plan!   It is, just like at WANG, IBM, HP, SUN, and etc., part of the 
compensation package, and held back from the salary of those individuals
who compete for it.   It is a carrot... a goal to shoot for.

No one is putting up an additional $x million to send people to Hawaii.   

They are withholding $x million from the salary plan, and redistributing it
on a yearly basis to that years top performers.

It is an incentive system that works very well (in general) for the Sales
organization.   There are some problems with other organizations where the
selection process is polluted by politics.

Every other group in Digital can establish similar awards.  Engineering can
take $x million from their salary pool for FY93 and award the top x% with
top end workstations, for example.

Regardless of how you distribute the pool of money, the value is a constant.

Bob

I think any Wang salesperson who can sell the company's products lately must be
doing a fantastic job and deserves more than a trip to Hawaii. In fact, maybe
Digital should try to hire these people.

I'm surprised customers are still buying anything from Wang.

Vicki Meagher

    re: .37
    
    I don't know.  Since we don't know what the criteria are and Wang does
    have some installed base, their top sales person could have sold $50K
    of spares to some site concerned about parts availability, etc.
    
    Bob

    
    I thought I saw where they indentured themselves for $25 million to
    sell IBM.  Apparently IBM doesn't think they're such hot salesmen!
    

.19>        As for the bottom line:  The employees did much better than the
.19>        stockholders--the employees claim for vacation time has a higher
.19>        precedence than the stockholders claim to anything.

	Hmmm, seems fair.  I mean, they are the ones who actually worked
	for it, aren't they?

    As far as awards to sales folks go.....it's nice to get them; but
    the recipients also get another "award", from the IRS.  The value of
    award is added to their W2s.
    
    A friend who won Dec 100, DECathalon and some other award all in the
    same year had her husband begging her not to do it again.  He's self-
    employed and the tax hit was enormous.  The company she's now with
    taxes her commission checks as she receives them; works out much
    better that way.
    
    Karen
    

    I hear their stock is down to .75 a share...would it be a good buy?
    
    Just curious,..

    re: .42
    
    >I hear their stock is down to .75 a share...would it be a good buy?
    
    I'll sell you some. I bought yesterday at 3/8 - today 1/4....
    
    Let see, I'll let some go for, say, 5/8? That's better than .75!! ;-)
    
    J.B.

    
    At 75 cents a square foot, it's price competitive with a good grade
    of wallpaper.
    

.18>    Rather it seems that "caring about the bottom line" can too little and
.18>    too late in Wang's case.
    
    I disagree, I believe they've had concern about the bottom line all along.
    It wasn't concern that was lacking, it was competence.
    
    I'm sure that was shown when the Doctor gave Fred the company and then
    later took the reins back because of the slipping performance.
    
    That's what Digital can learn from Wang's fate, along with the lesson
    Alfred already pointed out about the demonstrable failure of downsizing.
    

Re:.41  (Tax hit for awards)

These awards do increase you tax liability.   However, Digital also gives you a
tax adder to help.

Bob

    
    Wait a minute.  I thought the tax adder was only to help defray the
    burdensome tax bite associated with a relocation; not to ease the
    pain of "fun and games" and other perks.
    

A tax adder also helps defray the cost of business awards such as COE.

Bob