Digital Equipment Corp, totally refusing to comment on the speculation about Intel Corp buying or licensing its Alpha chip technology to settle the companies lawsuit (CI No 3,262), has released first quarter figures for fiscal 1998 which show a considerable improvement in profit over last years first quarter and a small rise in revenue. The company reported net profit of $25m for the quarter ended September 27, against losses last time of $66m, on turnover that rose 1.7% to $2.96bn. The company said the first quarter is traditionally weak, and therefore it was particularly pleased with the improvement. It attributes the improved performance largely to a change of sales and marketing strategy, where it has focused on a unified strategy for the company, rather than selling as individual business units. Vice president and chief financial officer Vin Mullarkey said while the business unit organization had enabled the company to control costs and improve margins, it had the effect of fragmenting the company from a sales and marketing point of view. To consolidate the company once more, Digital has recently launched a worldwide advertising campaign to strengthen its brand identity. Bruce Clafin, senior vice president and general manager worldwide sales and marketing, admitted fiscal 1997 had been disappointing, and revenues had declined, but he said the problems were self-inflicted, and therefore the company was able to fix them. Digital has set up a new infrastructure to support its 26 largest customers from a single source on a worldwide basis, to respond to demand from these customers. The company admits it had an alarming attrition rate in its field sales organization last year, but says morale here is now much higher, and attrition is currently in single digits. The company says its Alpha servers running Unix gained market share by 28% in the quarter, with its Intel-based Windows NT servers gaining 140% market share for the same period. It says it is focusing the Alpha servers in areas where they show most impressive performance gains, such as internet service provision, web search and database serving. While it would not comment on the Intel speculation regarding Alpha, Mullarkey would reiterate only what was said in a letter to its staff (CI No 3,266), that there was no reason to stop selling Alpha. We do not expect any impact on our business, Mullarkey said. The company is very confident about the second quarter, and expects continued growth in both revenue and margins.
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