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Digital continues its slide

Net income and revenues dip in the company's third quarter, the fourth consecutive year-to-year decline.

Digital Equipment (DEC) today reported that year-to-year quarterly profits and revenues declined for the fourth consecutive time.

DEC reported net income of $51 million, or 27 cents per share, for the quarter that ended March 29, down significantly from $124 million, or 74 cents a share, in the same quarter last year. Revenues for the fiscal third quarter were $3.31 billion, down from $3.62 billion for the year ago quarter, the company said.

The figures did beat Wall Street estimates, however. Digital had been expected to post 24 cents in per-share profits, according to a First Call consensus estimate.

While the results mark a full year of quarterly declines in its year-to-year profits and revenues, the computer maker managed to increase net profits over a dismal December quarter, when profits fell to $31.9 million, a 78 percent decline.

Yet, the most recent quarterly revenues were down by about 9 percent, adding to a 15 percent decline during the period ended in December, when the company posted $3.4 billion in revenues.

The news comes after the Maynard, Massachusetts-based computer hardware and software maker announced plans earlier this month to reorganize its operations to combine sales and marketing of its personal computer and systems units.

Even prior to the April 2 reorganization, the company had moved to reduce costs. DEC said today that its operating expenses fell to $1.06 billion for the second quarter, compared to $1.13 billion for the year-ago period. The company has slashed its workforce by nearly ten percent since March 1995 and now employs 55,100 people.

Despite the declines, DEC chairman Robert B. Palmer said in a statement that he was encouraged by growth of the company's Internet business and in sales of systems that support Microsoft's Windows NT operating system.

DEC's business supplying servers, networking products, software, and services for accessing the Internet has grown to generate more than $1 billion in annual income for the company. DEC installed some 900,000 seats of Microsoft's Exchange groupware server in the last two quarters, the company said.

However, DEC is facing a challenge to its five-year relationship with Microsoft. Last month, industry giant Hewlett-Packard announced an alliance with the software publisher that is expected to siphon off some of Digital's NT business.