re: Europe vs Asia
I am trying to get a handle on this, since there seems to be some uncertainty on this thread over the relative impacts of Asia vs Europe. The last breakdown I could find is in the 1996 annual report - they don't seem to give a sales breakdown by region in the quarterly reports. Anyways the numbers for 1996 are shown below. The first number is the sales, and the second number in parenthese is the profit. All numbers are in millions.
Net Revenues
USA
Unafilliated consumer sales: 4,397 (0.140)
Inter Area Transfers: 1,467
Total 5,864
Europe
Unafilliated consumer sales: 5,485 (142.2)
Inter Area Transfers 315
Total: 5,800
Canada, Latin America, Asia-Pacific
Unafilliated Customer Sales 3,165 (35.6)
Inter Area Transfers 1,224
Total: 4,390
Eliminations -3,007
Net Revenue 13,046 (Operating Income: 130.3)
Now I would assume that Asia-Pacific would account for no more than 2.5 billion in sales in total, since Canada, Asutralia and all of South America must account for at least $600 M in sales, and possibly more (just a guess).
Europe on the other hand accounts for $5.5B in customer sales, which is about 2x my estimate of Asia-Pacific Sales.
In terms of profit, Europe delivered 4x the profit of the rest of DEC put together - 80% of operating profit.
So I would say that, unless things have changed drastically in 1997, Europe is a lot more important than Asia is.
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Regarding currency: DEC has a natural currency hedge since it buys things from Asia; from its Asian subsidiaries, and from third parties. All sorts of components will be coming from Asia: video monitors, memory chips, disk drives, CD ROMs etc, etc. These will be bought from Asian companies and paid for in Asian currencies. If DEC had no use for Asian currencies, things would be worse. Also, due to weaker currencies, imports should be cheaper.
In 1996, it was the USA where DEC had the most problems. The sale of the money losing Hudson facility will help fix things up a bit. The decreased headcount (2,000 employees is about $200,000,000 salaries+benifits+overheads) this should also help improve profits.
Regards,
John Sladek |
