Digital Equipment Corp is planning a drastic 20% to 25% cut in engineering and research expenditure, shaving $400m off its annual budget according to insiders that spoke to the Wall Street Journal, who said the moves were outlined to senior managers by president Ken Olsen on January 14. According to an internal memo, Olsen will streamline product packaging and engineering, and kill off perpetual projects that divert precious engineering funds to a few low-volume products. DEC spent $1,600m on research and development, 12.5% of turnover, in calendar 1990, spending as a proportion much more than do the likes of IBM Corp and AT&T Co. A trimming of product lines and variations, and a simplification of marketing is expected to be initiated within the next two or three weeks and several of the top DEC managers are expected to be without a job.
