Restructuring pushes DEC into dollars 1.7bn loss

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The Independent Online
DIGITAL Equipment Corporation, the troubled US computer manufacturer, yesterday produced fourth-quarter losses of dollars 1.75bn (pounds 1.17bn),including charges of dollars 1.2bn to cover employee lay-offs and a company restructuring.

Even without the restructuring charges and some deferred tax adjustments, DEC's net losses of dollars 160m were worse than analysts had expected. Total operating revenues stood at dollars 3.92bn, almost flat compared with a previous dollars 3.91bn. DEC's losses for the full year to 2 July were dollars 2.16bn, the company's fourth successive year of losses.

Digital is in the midst of changes that include streamlining management, a cost-cutting programme involving 20,000 redundancies, and pushing more aggressively into the personal computer end of the market.

Sales of PCs nearly doubled in the quarter to represent 39 per cent of sales revenues.

Robert Palmer, president of Digital, said that the fundamentals of the company's business were 'showing some positive and encouraging signs'.

For the first time in five years Digital experienced two successive quarters of year-on-year order growth.

Gross margins fell to 25 per cent of product revenues as a result of pricing initiatives, a continued shift to low-end products, selling through indirect channels and one-time costs related to plant closures.

DEC shares rose to dollars 19.37 from Monday's dollars 18.75.