Ninety per cent of Digital Equipment's restructuring is completed, president Bob Palmer told the Decus user conference in California this week, and the company should be in profit this quarter.
This is a well-aired theme with Palmer, who has spearheaded a series of reorganisations since taking the helm three years ago - moves that have often bewildered users and investors. The promise that the changes, with their accompanying layoffs and quarterly charges, are almost over has been made before by Palmer, but Wall Street seems more confident that Digital may really stablise this time. "There's really not much more reshuffling and cost cutting they can do," said one Digital watcher.
Newer revenue streams are kicking in now to balance the long decline of Digital's traditional products. Servers and network equipment for Internet, plus newer Alpha server models, are key growth areas, while the network business unit is profitable. However, Digital still has a huge legacy customer base to support and upgrade, and its workstation and server ranges have not achieved market leadership.
Last quarter, Digital reported a $65.9 million loss, three times what analysts had expected.
Digital also launched new low end servers based on Pentium Pro processors and running NT. The Prioris range is a direct attack on Compaq, which moved into the workstation space last month, with similarly featured Pentium Pro models. Howard Elias, vice president of the PC division, said that his business is focusing more heavily on high margin servers to boost its financial performance. He expects the PC company to be back in profit in the current quarter, having doubled its margins and reduced costs.
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