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EARNINGS

Digital Equipment Profit Soars 153% to $182.6 Million in Quarter

October 16, 1986

Digital Equipment reported that net income in its first fiscal quarter rose 153% on a 26% increase in revenue, reflecting the popularity of the company's networked computers and improved cost controls.

Digital's results contrasted sharply with those of International Business Machines, the industry leader that it has been pursuing aggressively. IBM reported Monday that earnings fell 27% in the quarter.

Digital, based in Maynard, Mass., said it earned $182.6 million in the quarter ended Sept. 28, up sharply from $72.3 million a year earlier.

Revenue rose to $2.04 billion from $1.62 billion a year earlier.

IBM said a major factor in its earnings slump was a slowdown in the growth of its overseas business, which came on top of continued sluggishness in domestic demand for computers.

But Digital made no mention of sluggish capital spending in the United States and said: "During the quarter, the company again experienced a high level of demand from European customers."

In an interview, Mark Steinkrauss, Digital's director of investor relations, said: "I think the whole situation with capital spending is fairly pervasive across the industry. While we've done better than most, we're still affected."

Kenneth Olsen, Digital's founder and president, said the company had continued its flow of new products and was showing good results with efforts to target sales at particular industries--financial services in particular.

Digital is the world's third-largest computer company behind IBM and the newly merged combination of Burroughs Corp. and Sperry Corp.

Digital added 3,000 employees in the quarter to bring its total to 98,000, Steinkrauss said. More than half were in the areas of sales, sales support, services and software, he said.

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