Digital Loses $871 Million, Plans Layoffs

Following the pattern of other troubled U.S. computer makers, Digital Equipment said Thursday that it will close plants and lay off several thousand more workers as part of a massive retrenching to cope with the industry’s eroding global prospects.

As a result of a $1.1-billion charge to account for the cutbacks, the nation’s second-largest computer maker said it lost $871.3 million, or $7.08 per share, in the final quarter of its fiscal year, despite a jump of more than 15% in revenue, to $3.9 billion. In the comparable year-ago period, the company lost $256.7 million, $2.11 per share, on sales of $3.4 billion.

Digital, which has already laid off more than 9,000 workers during the past year, becomes the latest among large, established U.S. computer makers to step up retrenchments amid the industry’s declining growth and increasing competition. Within the past week, International Business Machines and Unisys have said they expect to trim tens of thousands of workers during the next year to reduce costs and improve profit prospects.

Although Digital representatives said specific details of the new cuts had not been drafted, one official said about 2,000 of the company’s 120,000 workers worldwide would be laid off within the next three months. He said the company has not decided which plants should be closed.

The official said Digital’s California facilities, including two research laboratories and a mainframe computer plant in the Silicon Valley, probably would not be affected by the cuts because the company continues to invest in those activities. However, the company’s nearly two dozen sales and support branch offices throughout the state could be targets for the ax.

Analysts and investors appeared cheered by the move. Digital stock rose $2.875 per share to close at $69.875 on the New York Stock Exchange.

In a separate announcement, Wang Laboratories said it lost $314.5 million, or $1.88 per share, in its final quarter, including a special charge of $234.6 million to cover its ongoing restructuring, plant closings and staff reductions of up to 4,000 during the next year.

Company Reports

Digital (in millions of dollars) 1990: -256.7 1991: -871.3

Quarter ended June 29