DEC president Ken Olsen does not expect his company to match the 84% leap in profits for fiscal 1987 this year, he told Reuters in an interview, but he does not necessarily assume any slowing in the company’s 25% annual rate of turnover growth – I’ll still tell you we can’t keep this up, but […]
DEC president Ken Olsen does not expect his company to match the 84% leap in profits for fiscal 1987 this year, he told Reuters in an interview, but he does not necessarily assume any slowing in the company’s 25% annual rate of turnover growth – I’ll still tell you we can’t keep this up, but I won’t promise you it won’t go on for a while. On the profits front, We can’t increase the percentage of profit because it’s high enough now that it’s not practical to say we’re going to increase the profit on a per sales dollar, he said, explaining that for DEC to continue to improve profits so dramatically, each additional sales dollar would have to be almost 100% profit. The consensus of analysts looks for about $11 a share this year, up from $8.53 for the year to June. Olsen is also chary of being cast as the computer industry’s champion against IBM. He does not deny that IBM is DEC’s major competitor, and in some cases the only one, but he insists that in many ways DEC will never be in the IBM category. They are a 50 billion dollar company, we are a 10 billion dollar company. We are not going to take over a big portion of that 50 billion dollars. Olsen, notoriously difficult to interview, also declared that DEC would not try to match IBM product for product across the board. We will stay out of those areas in which they do well, citing the retail end of the personal computer market, the integration of computers and telecommunications, and point-of-sale systems. It is noteworthy that in the first, IBM is seeking to rise above the mass market, in the second, its Rolm Corp acquisition has proved a disappointment while Satellite Business Systems was a disaster, while in the third, DEC has teamed up with Ericsson to pro-duce integrated point-of-sale solutions. Olsen did say that the pace of new product introductions would not slow down, adding that growth would continue to come primarily from commercial applications. We are applying to the commercial side those efficiencies that we introduced in the technical side of the market, he said. That is where the most excitement is. How about acquisitions – there has been talk that Apple Computer and DEC would make a very good fit. Olsen denied consideration of any formal tie-up, although the two companies consult frequently. They like us, we like them, Olsen commented. As for acquisitions in general, he doubted that DEC would be making any moves. We used to look at potential acquisitions, but then we got tired of looking at them. It’s unlikely we will ever find one we like.