Layoffs, Sale of Some Real Estate and Other Assets : Cutbacks Planned at Control Data
Control Data, acknowledging a slump in sales and an expected loss of as much as $21.4 million stemming from the Ohio banking crisis, will lay off an undisclosed number of workers and sell an unspecified amount of real estate and other assets to try to “improve profits.”
The mounting problems of the Minneapolis-based computer giant were announced in a letter sent Friday by Control Data President Robert M. Price to each of the company’s 55,000 workers worldwide.
“Because of these . . . and some additional shortcomings of our own,” Price concluded in the letter, “I no longer regard $4 a share in 1985 as an attainable goal.”
The company would not specify what annual profits are likely to be, but several analysts said early this week that they expect per-share earnings in the range of $3 to $3.50.
Friday’s letter indicates that many of those laid off will be in management. But a Control Data spokeswoman would not specify which employees will be cut or which assets will be put on the chopping block.
“We don’t know who, where, when or what,” the spokeswoman said, adding that a decision on layoffs would be announced as soon as possible.
Price’s letter confirms reports by analysts since last fall that Control Data, like other major electronics companies, is feeling the squeeze of an industrywide slowdown in computer equipment sales. Businesses are postponing major purchases in anticipation of new products and because of a general slowing in the economy, analysts say.
The letter also confirms an analyst’s published report Tuesday that City Loan & Savings Co. in Lima, Ohio, a Control Data subsidiary, will lose all or most of the $21.4 million that it contributed to Ohio’s deposit insurance fund for state-chartered thrift institutions.
City Loan & Savings, which is itself stable and was allowed to reopen this week, was among the 70 institutions closed by Ohio Gov. Richard F. Celeste two weeks ago when the state’s insurance fund appeared to be depleted by the failure of Cincinnati-based Home State Savings Bank.
On Tuesday, E. F. Hutton lowered its per-share earnings projection for the company to 5 cents from 40 cents for the first quarter ending March 31.
Hutton and other Wall Street investment houses said orders for Control Data’s computer add-ons have dropped sharply in the last six months. The drop results from a decrease in orders from computer makers such as Data General and Digital Equipment, which add the components to the mid-size computers that they make and sell in retail markets.
Computer add-ons accounted for $1.54 billion of Control Data’s 1984 sales of $5 billion. Other computer sales accounted for $2.22 billion.
The company’s commercial credit subsidiary, which includes City Loan & Savings and was put up for sale last November, accounted for $1.2 billion of last year’s revenue.
