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Technology Stocks : Digital Equipment Corp. (DEC) -- Ignore unavailable to you. Want to Upgrade?

To: William L. Vu who wrote (2664)	1/8/1998 10:12:00 AM
From: TimD	Read Replies (1) \| Respond to of 3276

<People are worried anout SEA impact on DEC but ASIA only account for 20% of DEC sale vs 60% of DEC sale for international. > Actually, the 20% is representative of the entire "Asia Pacific" region, with Japan taking at least 10% and Australia/New Zealand another 5%. That leaves only about 5% for SEA! While small in proportion to total sales, SEA did represent the best opportunity for growth (20%+ per year in several countries), until the currency crisis hit. The real impact is just starting to be felt, and will probably not affect earnings significantly until Q3. Europe still has a much bigger influence than Asia Pacific or SEA. A couple of other posters have referred to DEC's low margin service business. What do they base this conclusion on? The majority of DEC's service revenue still comes from high margin maintenance services for its installed based. As that declines the other service offerings (consulting & outsourcing) are expected to make up the difference (at lower, but still respectable margins). While the services margin on the P&L may look low compared to the product margin, if you strip away the SG&A that is tied to the product business you see a very healthy bottom line for a services-only business. It's no coincidence that IBM and HP have both started to focus on service...they see the same opportunity.