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MAYNARD, Mass., July 24, 1997 Digital today reported net income of $124 million, or $.75 per common share, for Q4 1997. Net income for l996 Q4 was $59 million, or $.33 per common share.

For 1997 fiscal year ending June 30th 1997, the company reported net income of $141 million which is $.68 per common share.

"I am very encouraged by the progress Digital made in the fourth quarter," said Chairman and CEO Palmer. "We achieved improvement for the third straight quarter while further positioning the company for both near-term and long-term growth. I am convinced that Digital is in the best position since the mid-1980s to take advantage of current and emerging market opportunities. "As evidence of our confidence in Digital's future, the Board of Directors has authorized the repurchase of up to 15 million shares of the company's common stock," Palmer said.

Total revenue for the quarter was $3.5 billion compared with $3.7 billion in 1996. For fiscal 1997 revenue was $13.0 billion, compared with $14.6 billion reported for fiscal 1996.

Product revenue for the quarter was $2.0 billion versus $2.1 billion in
the prior year. On a sequential basis, product revenue was up 9 percent over the third quarter. Service revenue was $1.5 billion, compared with
$1.6 billion in last year's fourth quarter. Gross margin improved to 34.6 percent from 33.4 percent in the third quarter and improved a full two points from the 32.6 recorded in the fourth quarter last year.

Product gross margin was 37.2 percent compared with 35.3 percent in the
third quarter and showed a three point improvement over the 34.3 percent for the fourth quarter of fiscal 1996. Service gross margin was 31.1 percent for the fourth quarter compared with 31 percent in the third quarter and showed almost a full point improvement from the year ago quarter.

"During the fourth quarter, Digital recorded its best gross margin in more than three years," said CFO Mullarkey. "This reflects continuing improvements in product cost, productivity programs and mix. We also achieved our best inventory turns ever and the lowest accounts receivable days sales outstanding since the second quarter of fiscal

Palmer said Digital's personal computer business achieved a higher level
of profit for the third straight quarter, continuing a significant
turnaround from the third quarter of fiscal 1996 when it was affected
adversely by significant price competition and high levels of inventory in the channel.

"The progress in our personal computer business over the past year has
been excellent," Palmer said. "We defined and implemented a strategic focus on Windows NT commercial client/server solutions. In addition, we made dramatic improvements in our operating performance."

The Windows NT segment grew about 50 percent over the comparable quarter
last year, driven primarily by growth in both Alpha and Intel servers. The high performance UNIX segment also experienced growth over last year and the company recorded strong growth in its storage business.

Effective July 1, 1997 Digital implemented a new structure to strengthen its competitiveness with a unified sales and marketing organization and product and service divisions chartered to provide leadership solutions for customers' needs.

"More than ever before, Digital now has a strategy and a structure which
strongly support what it can do best: provide complete solutions," Palmer said. In support of this solution focus, the company made a number of significant announcements during the quarter including:

-- The company won its one millionth Microsoft Exchange seat -
establishing itself as a clear leader in the mail and messaging market.

-- New and dramatically enhanced Digital AlphaServers including the
AlphaServer 800 and the AlphaServer 1000A systems. The entry-level and small business server solutions offer high-availability computer-clustering solutions for UNIX and Microsoft Windows NT and new Windows NT intranet search capabilities.

-- A powerful new line-up of Windows NT personal workstations and PCs for networked business solutions, two of which are based on Intel's Pentium II processor.

-- A new line of high-performance 64-bit Alpha UNIX personal workstations that offer users breakthrough performance at PC prices.

-- Upgrades in its Affinity program which provide new products, embedded
services and solutions to help customers develop, deploy, integrate and manage applications linking the OpenVMS and Windows NT platforms.

-- New AltaVista multilingual search sites in Asia and Europe and its next generation of AltaVista Search software extending information retrieval to more information types and domains than ever before.

-- The company, along with partners Samsung Electronics and Mitsubishi
Electric, launched its "AlphaPowered" campaign, designed to raise awareness of the Alpha brand.

The company expanded its service offerings as a critical, strategic
element for providing complete solutions and as a supplier of choice for
enterprise solutions. Digital is capitalizing on the synergy of industry-leading products and services to solve customer problems across the extended enterprise.

CFO Vincent J. Mullarkey said Digital's balance sheet showed continued improvement in all asset categories as the company ended the quarter with $2.5 billion in cash. This represents an increase of nearly
$500 million over last year. DEC also repurchased 4 million shares of stock during the quarter and 10 million shares over the course of the year for more than $350 million.

The corporation ended the quarter with approximately 54,900,
employees -- a reduction of 4,200 positions from the same period last year...


Funny how in hindsight it looks like Digital was doing a lot of good stuff. they had a solid position in the Enterprise Market along with IBM.

John T.
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