Digital Reports $83 Million Loss
Oct. 20, 1993
BOSTON (AP) _ Digital Equipment Corp. today reported an $83.1 million quarterly loss that was worse than what many analysts expected but still marked an improvement from a year ago.
The loss for the quarter that ended Oct. 2 amounted to 62 cents per share, compared with a loss of $260.5 million, or $2.04, per share in the same three- month period last year.
Robert B. Palmer, president of the Maynard-based computer company, said Digital was hurt by falling revenues in the quarter, the first of the company's fiscal year and traditionally a weak period.
Overall revenues dropped by 9 percent to $3.01 billion, compared with $3.3 billion in the same quarter last year.
Palmer blamed the revenue decline on weak markets in Europe - particularly Germany and Italy - as well as the negative impact of foreign currency fluctuations. Digital's business in Asia showed good growth, ''but not enough to offset declines in other areas,'' he said.
The company's stock was down 50 cents at $36 per share in early trading on the New York Stock Exchange.
Digital, which ended its last fiscal year by reporting a profitable quarter for the first time since 1991, had warned earlier it might follow that with a loss.
William Steul, Digital's chief financial officer, noted that Digital is being pinched by some of the same forces squeezing the entire computer industry: a shift to lower priced products with thinner profit margins.
But Steul said the company's results have improved for four straight quarters, thanks largely to cost-cutting.
Digital, which has laid off thousands of workers, cut another 1,000 jobs during the most recent quarter, dropping its payroll to 93,200.
Laura Conigliaro, an analyst with Prudential Securities in New York, said Digital's cost-control efforts have been ''amazing and miraculous.''
''Nonetheless, companies have to generate revenues,'' she said.
Digital has been undergoing wrenching changes for more than a year, reorganizing its corporate structure and revamping its product line.
The latest earnings report ''sort of makes you stand up and realize when companies are going through the kind of transformations (Digital) is going through ... the process of generating revenues comes back more slowly than you had hoped,'' Conigliaro said.