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Digital Equipment CEO Optimistic About Future

November 10, 1994

BOSTON (AP) _ Digital Equipment Corp.’s top executive gave shareholders an optimistic view of the company’s prospects Thursday, saying there were signs it would soon make money again.

Digital lost $2.16 billion in the fiscal year ending Sept. 30 and laid off 12,000 employees.

Over the past two years, Digital has cut 25 percent of its work force to lower expenses as demand has shifted to lower-margin, small computers. The cuts have made Digital a ″leaner, more decisive, more agile company,″ Chief Executive Officer Robert Palmer said at the annual meeting.

″We’re determined to return to profitability this year,″ he said.

The company on Friday will unveil new notebook computers, rounding out the PC product line that has been one of the company’s bright spots this year.

It plans four new models, two weighing 5 pounds that have a floppy drive and two weighing 4 pounds that don’t. Prices range from $1,700 to $4,400 depending on type of screen, processing speed and memory size.

Both Digital and another large system maker, Hewlett-Packard Co., have jumped into the top ranks of PC sellers this year. Hewlett-Packard this week also rolled out new notebook computers.

At the Digital meeting, Palmer told shareholders one reason for his optimism was a 4 percent jump in operating revenue during the fiscal year.

Some observers are not as confident.

″I have yet to see that optimism reflected in the financial results,″ said Franc Romano, an industry consultant with the Boston-based Aberdeen Group who attended Thursday’s meeting. The company’s cash position ″doesn’t breathe a lot of optimism in me.″

Moreover, he said, Palmer’s hopefulness only addressed the immediate future.

″They’re just so consumed with bailing out the rowboat that they’re not concerned with where it’s heading,″ Romano said.

Digital’s stock fell 75 cents to $30.75 on the New York Stock Exchange Thursday.

A group of 14 Digital employees from five European countries came to the annual meeting to protest job cuts.

About half of Digital’s 60,000 layoffs have been in Europe. And the computer company plans to slash another 10,000 employees from its European operations over the next several months.

″We’re convinced that there are other methods to do cost cutting and to keep employment,″ said Wolfgang Muillir, a Digital software trainer from Munich, Germany.

Palmer acknowledged that employee morale - both here and in Europe - is low in the face of cutbacks and lost profits.

And while layoffs are painful, ″We’ve got to find a solution and we’re trying to do that as humanely as possible.″

Morale will improve as profits do, he said.