EARNINGS : Digital Reports Drop in Income

Digital Equipment Corp. today reported a 28% drop in second-quarter earnings, but company officials said the results show that the computer maker has started to reverse its recent troubles.

For the quarter that ended Dec. 29, Digital had net income of $111.1 million, or 92 cents per share, compared to $155.4 million, or $1.25 per share, during the year-ago period.

Digital had total operating revenues of $3.3 billion, up 5% from $3.1 billion during the second quarter a year ago.

Product sales for the quarter were down to $1.9 billion from $2 billion a year ago. But service and other revenues rose 16% to $1.3 billion.

Digital has undertaken a $1-billion cost-cutting program, and last week it announced the first layoffs in the company’s 33-year history, eliminating more than 3,000 jobs.