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Digital profits fall
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January 16, 1997: 2:18 p.m. ET
Computer firm reports income of $31.9 million for its second quarter
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MAYNARD, Mass.(CNNfn) - Digital Equipment Corp. Thursday reported net income of $31.9 million, or 15 cents per common share, for its fiscal second quarter, ended Dec. 28, 1996. That compares with net income of $148.8 million, or 91 cents per common share, for the same period last year.
Total operating revenue for the quarter was $3.358 billion, compared with $3.951 billion for the same period a year ago.
"I am satisfied with the progress the company demonstrated in the second quarter compared with our first quarter results," said Digital Chairman Robert B. Palmer. "We needed to address a number of issues over the past few quarters to position the company for long-term growth. We are doing so."
Product revenue came in at $1.844 billion compared to $2.347 billion in the second quarter of last year. However, product revenue was up 21 percent from the first quarter of fiscal 1997.
Digital's service revenue was $1.513 billion compared to $1.604 billion reported for the same period last year. Service revenue was up 9 percent on a sequential basis.
Over the past month, Digital has lowered the price of its leading 64-bit Alpha microprocessors and its AlphaServer and AlphaStation line.
The company continues to make progress in improving overall gross margins, said Vincent J. Mullarkey, vice president and chief financial officer.
Gross margin for the quarter was 32.9 percent, compared with 32.6 percent for the same period in the prior year and 31.3 percent in the first quarter of the current fiscal year.
Total operating expenses for the quarter were $1.067 billion, down 6 percent from a year ago.
"The decrease reflects the effects of sound business controls and the continued implementation of our restructuring," Mullarkey said.
The company ended the quarter with approximately 55,900 employees, down 1,100 from the prior quarter.
Mullarkey said continuing improvements in asset management resulted in the company ending the quarter with approximately $2.3 billion in cash and short-term investments, up more than $250 million from the first quarter.
Palmer said Digital's personal computer business unit generated a profit for the quarter, and met all of its operating objectives.
The Internet software business unit introduced a host of products based on Digital's powerful AltaVista search engine technology including the AltaVista Directory '97, an intelligent and powerful out-of-the-box personal directory application for Windows NT servers and AltaVista Search My Computer Private eXtension (PX) software.
The software extends the strength of the AltaVista Search public service on the Web to private domains.
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