Digital has increased its profit and has won a round of its legal copyright battle with Intel, which has promised to continue supplying Pentium chips until January 1998.
Intel had threatened to cut Digital?s chip supply, a move which would have forced Digital to make a costly switch of all its PC production to Advanced Micro Devices CPUs. Digital warned that any stoppage would be illegal and expects supply to continue to 1999.
Earlier this week, Digital agreed to return documents regarding to Intel?s joint processor development with Hewlett-Packard, Merced, saying the information was a year old and irrelevant. In its response to Intel?s legal moves, Digital said Intel wanted to use its "monopoly power" in chips to harm its business.
In the three month period to 28 June, Digital continued to make profit and shed its flabby, inefficient image. Improvements in gross margin, inventory management and accounts receivable figures helped Digital continue its progress, despite slight falls in product revenue and even service revenue, the most profitable and fastest-growing part of the business, which dropped from $1.6 billion to $1.5 billion.
Chairman Bob Palmer said: "I am convinced Digital is in the best position since the mid-eighties to take advantage of current emerging market technologies. As evidence of our confidence in Digital?s future, the board of directors has authorised the repurchase of up to 15 million shares of the company?s common stock." As in previous quarters, Digital said growing Microsoft Windows NT-based server sales continued to grow.
Digital reported turnover of $3.5 billion, down from $3.7 billion in Q4 1996, but it made a $124 million profit compared to a $433 million Q4 1996 loss - a period which included a $492 million restructuring charge. During its financial 1997, Digital made $141 million profit, compared to a $112 million loss in 1996, although turnover fell from $14.6 billion to $13.0 billion. The results were slightly better than analysts expected.
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