Digital loses $433 million

Digital announced a large fourth-quarter loss due to poor PC sales and restructuring charges.

As expected, Digital Equipment today announced a large fourth-quarter loss attributed to restructuring charges and plummeting revenues in its personal computer business.

Digital lost $433 million, or $2.87 per share, in contrast to profits of $160 million announced in the corresponding quarter of 1995. Revenues for the quarter reached $3.72 billion, down slightly from last year's $3.75 billion.

The company announced on July 2 that it would take a $492 million restructuring charge and cut 7,000 of its 60,900 employees, mainly because of the poor performance of its PC division. Revenue in that division was down 3 percent in the fourth quarter versus a year ago.

While some analysts hoped that Digital would announce its withdrawal from the PC business, according to Reuters news service, the company today issued a statement reiterating its commitment to selling Intel-based PCs as part of its Windows NT strategy.

Digital stock was up $1 over yesterday's close, trading at 36-1/2 at 3pm EST. The company is repurchasing up to 10 million common shares to fund an employee stock plan.

Mainframe vendor Amdahl also had a hard quarter, reporting a $249.4 million loss, or $2.07 a share, for the quarter ending June 28. Amdahl stock held steady, however, at about $9 a share as of 3PM EST. The company had warned Wall Street earlier this month that it expected to lose $250 million this quarter.

The company blamed the big loss on a $130 million write-off of inventory as customers waited for cheaper, next-generation versions of its mainframe computers, due to ship in August. Amdahl also wrote off $20.7 million for acquisition of systems integrator Trecom Business Systems. Operating losses came to $77.7 million

Amdahl is diversifying into computers services and software. The company also announced this month a new smart card division to supply systems to process electronic cash transactions.

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