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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
Bill
Helm,
Treasurer, Talks About Financial Performance
Distributed
Systems
Manufacturing 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 superminicomÂputers
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 deÂsigned 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 throughÂout 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
elecÂtronic 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). UnforÂtunately, 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 reÂaligned to achieve better integration and
clarify responsibilities for its various development activities.
Colin Adams is responsible for system
management and development of departÂmental 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.
(Dennis Schneider),
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
IndusÂtrial 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.