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Articles about DEC
Volume 3, Number 3 July 1984
Digital Expands Leasing & Financing Services
Sales Symposium Replaced By Local Events
Major Digital Computer Network Launched At U. Of Houston
Recent PC Sales Success
Bill Helm, Treasurer, Talks About Financial Performance
Distributed Systems Manufacturing Realigned
BOSE Engineering Realigned
Reorganization In Digital Management Education
As part of a program to expand leasing and financing customers, Digital has formed a new subsidiary, Digital Equipment Finance Corporation, to be managed through the company’s U.S. Group.
Effective July 1, 1984, the U.S. Customer Fiinance Group will be providing complete point-of-sale leasing and financing services. This responsibiility has been shared with Digital Leasing, a vendor program managed by an outside leasing company. The U.S. Customer Finance Group will now serve as a single source for a broad range of these services. During the past ten years, leasing and financing services, for several hundred million dollars of sales, ahve been provided throught the U.S.
To maximize the impact of several major product announcements scheduled for the second quarter, the fall Sales Symposium will be replaced by a series of local events.
"The announcement strategy for these important products demands that we reach a larger audience than could have been reasonably accommodated at the single event in one location," explains Jerry Paxton, manager, Corporate Sales. "Therefore, we plan to hold a significant number of local events, some of which will take the form of mini-symposia."
Each local event will be focused on the new products and will be geared towards customers and sales prospects. This format will also include training on these new products for the worldwide sales force.
Digital and the University of Houston have announced plans to create one of the largest and most advanced computer-intensive educational environments in the nation. The major multi-campus, high-speed computer network, with a potential value of $70 million, will be implemented over a four-year period.
The University, with grants of up to $35 million from Digital, plans to utilize, during the first two-year phase, up to 4,500 Digital Professional 350 and Rainbow 100 personal computers and clusters of VAX superminicomputers distributed throughout the University's four campuses. Digital will also provide full-time technical personnel to assist in on-site network design and development.
Through the planned network, many academic and administrative computing tasks will take place at personal workstations. The network will be designed to support up to 20,000 personal computers for instruction, research and administrative activities. Faculty and administrative offices will house about a third of the workstations, with another third located throughout the campuses in clusters for student use. The remaining third will be made available to faculty, staff and students.
The Ethernet* local area networks on all four campuses will interconnect the workstations through a high speed microwave channel capable of transmitting over a million characters per second. Workstations in student and faculty homes throughout the area will have access to the network via telephone links.
The University of Houston System has a total enrollment of more than 44,000 students, with 6,000 faculty and staff members.
*Ethernet is a trademark of Xerox.
Members of the academic communities of Harvard and MIT will soon be able to purchase Digital’s personal computers on campus. Each school plans to purchase a minimum of 500 Rainbows, Professionals and DECmates to resell to students, faculty and administration.
The Professional Golf Association (PGA) has chosen the Rainbow 100+ for use throughout its organization. They have purchased 65 Rainbows to date and have placed them at headquarters in Palm Beach Gardens, Florida, and at local offices across the country. All are connected to the CompuServe* network, which enables them to communicate and share information via electronic mail and electronic bulletin board.
*CompuServe is a registered trademark of CompuServe, Inc
"The good news is we are working for one of the Fortune 100 companies and are enjoying exceptional revenue growth. We have superb products coming down the pike and have had superb products historically. We’ve enjoyed the ability to raise money in the financial market almost at will. We have a great group of people.
"But the hard, total, financial facts of the last two fiscal years don't give a warm feeling. We need to get back on the track we were on.
"On the plus side, our tax rate is now between 20% and 25% of income vs. close to 40% two years ago. That's a reflection of greater emphasis on doing some of our manufacturing operations in tax effective places. It's also a result of changes in U.S. tax laws which have helped us in terms of credits. That's helped our earnings a lot.
"If we look at the company, as we might look at our own personal finances, from the point of view of cash flow rather than earnings per share, there's lots of room for improvement.
"Two years ago, our operating profit as a percentage of revenue was a little over 15%. This year Wall St. analysts think it will end up at about 7%. It was a little bit above that last year. That difference between 15% and 7% has cost us about $600 million in cash over the last two years.
"A lot of cash has also gone into accounts receivable. In that area, we measure our performance in terms of 'days sales outstanding' (DSO). Unfortunately, since the end of FY82, that number has gone up from 72 days to 82 * days. We figure that, as a rule of thumb, every day is worth about $20 million. So during the course of the last two years we put away $200 million just to carry our customers' receivables. The good news is that that number was up to over 90 days after QI and due to some very hard work in the Field organization it has been brought down.
"Inventory also affects cash flow. The outside world measures us by looking at the number of times we turn our inventory compared to our revenue. That number has gone down by .15 turns over the last two years. Since each .1 turn is worth about $100 million, that means that over the last 24 months we've used about $150 million to support inventory performance that was less than the level we had two years ago.
"From a financial perspective, there are pockets that are performing better than the company as a whole. In particular, the Field Service business continues to do a good job of meeting its commitments.
"Digital has the resources it needs to continue to grow. But when we grow, in terms of revenue, at rates above about 22% and everything else holds
steady, we begin to need capital simply to finance our growth. So if we don't address the underlying problems affecting profit margins, inventories and receivables, the growth itself can compound the problems.
"In other words, the company is strong in its products and its people. But we can't afford to become complacent. Despite our continuing growth in revenue and improving earnings per share numbers, we have important and difficult challenges to face if we are to ensure the company's long term future success.
"We will meet those challenges if every employee is conscious of how he or she spends Digital's money, and by putting renewed focus on the management of our assets. Important management commitments to these challenges have been made as part of the FY85 planning process. All of us need to support these commitments."
Responsible for the introduction and delivery of Digital's communication devices and Ethernet* products, Distributed Systems Manufacturing (DSM), recently became an integral part of Computer Systems Manufacturing (CSM).
DSM's close working relationship with Systems Manufacturing, coupled with its ongoing linkage to Networks and Communication Engineering and Marketing, will help Digital move rapidly in tying systems into total network solutions for its customers.
DSM consists of the Augusta, Maine, plant; support functions in Maynard, South Lawrence and Tewksbury, Mass.; and dedicated capacity in Clonmel, Ireland, and Aguadilla, Puerto Rico. Peter Brown, manager, DSM, reports to Lou Gaviglia, group manager, CSM.
♦Ethernet is a trademark of Xerox.
Business and Office Systems Engineering (BOSE), under Bob Daley, has realigned to achieve better integration and clarify responsibilities for its various development activities.
Colin Adams is responsible for system management and development of departmental office system software, including ALL-IN-1 systems, as well as for U.K.-based BOSE development, documentation and performance activities.
Dennis Saloky manages development of word and document processing software and related text, graphic and image products and technologies. He also heads the U.S.-based office advance development group.
Fred Howell is in charge of Information Management and Videotex products, application development tools and technology, as well as VIA Base Product Marketing and all U.S.-based documentation and performance activities.
Don Young is responsible for the DECmate Program Office, DECmate hardware development, DECmate software and Base Product Marketing.
Bob Dockser has taken on a new assignment to investigate new products, product marketing, business and investment strategies and opportunities. In this role, he will be looking at new opportunities for products in the office and EDP marketplace.
A new (open) position, the BOSE Development Director, Will address cross organizational product development and architecture issues from a user, customer "system" perspective.
Bob Cohen continues as BOSE Controller and manager for Merrimack site F&A and MIS. Ken Kimball continues as BOSE Personnel manager as well as BOS Marketing and Merrimack site Personnel manager.
BOSE staff also includes representatives from Sales Software Services (Skip Walter) and Marketing.
Digital Management Education has been reorganized one support group, each reporting to Bob Levasseur.
The Generic Programs Group, under Jay Palermo, will design, develop and deliver generic training to all levels of Digital company. This group consists of a unit that focuses on people management/- leadership skills and one that addresses general business management skills.
The Functional Programs Group, under Joy Waldman, will design, develop and deliver all function specific training, such as Field Service Branch and Unit Manager Courses and the Management of Service Operations (MOSO) Program. This group consists of three units:
o Field Service, Software Services and Educational Services;
o Sales and Marketing; and
o all other functions.
Unaffected by these changes, Pat Baker's Office Automation Educatinoal SErvicees Group continues to report to Bob.
The Planning and Operation Group (manager yet to be named) will support the above three groups, providing strategic focus and operational efficiency, with planning, business analysis and information systems, course logistics, marketing and communications.
JAY ATLAS has been named manager of U.S. Small Business Sales, reporting to Jack Shields, vice president, Sales & Service. In this new position, Jay will be responsible for the Small Business Sales Organization, which now includes the Digital Business Centers, Retail Outlets, Dealers and COEMs. In addition, he will manage the Authorized Terminal Distributor and Industrial Distributor Sales organizations, as well as head the terminals and personal computer sales specialists programs.
Jay joined Digital in 1972 as a marketing specialist. Most recently, he was manager of the Field Service Business Management Group, which includes Field Service Marketing, Sales Support, New Business Development and Product management. He recieved his BSEE from City College of New York and his MBA from the Amos Tuck School of Dartmouth College.
MIKE CARABETTA has joined Digital as Bob Hughes, vice president, Business and Office Systems Marketing. Mike will serve as the DECtalk Team Leader, working with Engineering, Manufacturing, Sales and Marketing to make sure the product reaches its full market potential. He will work with all of Digital's marketing gruops to include DECtalk in their business plans and to assure that adequate resources are devoted to this product and its applicatinos.
Before joining Digital, Mike was one of the founders of Interactive Management Systems (IMS), Digitla's first Authorized Distributor.
JACK RAHAIM has been named Corporate manager of Personnel Systems, Administration and Finance, reporting to Jophn Sims, vice president, Personnel. In his new position, Jack will manage Corporate Personnel Data Systems, Corporate Personnel Administratino adn the Personnel Finacnial Controller organizations. He will also coordinate Personnel Services for the Office of the President. A Digital employee since 1980, Jack most recently served as Corporate manager of Personnel Administration.
DOROTHY TERRELL has been named plant manager for hte Boston Plant, effective July 2. For the past four years, she has held several positions as Group Personnel manager working across Manufacturing, Engineering and marketing. Her most recent assignment was as Group Personnel manager for Low End Engineering and Manufacturing, also providing Personnel support for the Personal Computer Marketing Group.