You’re thrashing about in the dark about when you try to dissect a company’s results before it has made its conference call, because so much is left out of the statement and saved for the analysts. So the fact that at first blush, Digital Equipment Corp’s $0.27 earnings per share for the quarter was better by three cents than the consensus street estimate and the shares were looking up to the tune of $2 at $28 may well have been utterly negated by what the company told the analysts. The third quarter bottom line was of course a pale shadow of the $0.74 it did this time last year, and the real worry has to be that after finally climbing into the mid-$14bns for the year, revenue is on the slide again, off 8.5% at $3.31bn in the quarter. And of course the company owns far less of its business than it did in its heyday – the sale of its substantial disk drive manufacturing business to Quantum Corp caused barely a blip in its figures because it still sells just as many disk drives to its customers as it ever did – it simply doesn’t make them any more, thereby losing the margin benefits of vertical integration – although it may well be able to buy the things more cheaply than it was able to make them. At all events, gross margin in the quarter fell to 33.4% from 34.6% a year ago but it was up compared with the 32.9% recorded in the fiscal second quarter. The actual profit number for the quarter was $51m – still dismal for a company of DEC’s size. Finance chief Vincent Mullarkey came on line to give a positive spin to the figures, saying Looking forward now to this quarter, the fourth quarter, expectations are that we will have a sequential revenue increase, comparable to what we’ve experienced over the last couple of years; a good solid continuation of gross margin improvement; profit improvement; and of course, continued balance sheet improvement, he declared.
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