Dataproducts Sees Loss, Raises Layoff Estimate
Dataproducts Corp. will post a loss in the quarter that ends June 30 and now plans to have its worldwide work force cut to 4,000 by July from 6,000 in January, officials of the Woodland Hills printer maker told securities analysts Thursday.
Outlining the company’s dramatic reorganization plans, officials also said the staff reductions include a cutback of 500 jobs in Southern California. Earlier company estimates had put the total company staff reduction at 1,400 employees, including 400 in Southern California. The layoffs have been under way for several months.
More Weakness Expected
In addition to the expected loss for the current quarter, Dataproducts officials also predicted weak results for the quarter that ends in September as the company tries to cut costs in the face of a computer industry slump. “We’re having to do some things that really aren’t a lot of fun,” said company founder and Chairman Graham Tyson, who was reinstated as chief executive last month with the resignation of Charles A. Dickinson.
One analyst, Bob Grandhi of E. F. Hutton, said he expects a loss of $3 million in the current quarter. Dataproducts earned $27.7 million on revenue of $471.8 million for the fiscal year that ended last March 30.
Dataproducts is reorganizing to centralize such functions as product development, manufacturing and marketing. Under Dickinson’s leadership, the company had sought to spur entrepreneurship by organizing in a series of semi-independent units that were each responsible for profit or loss.
“To our customers, we looked like a series of small companies,” Tyson said. But that organization produced higher overhead costs and also made the company “somewhat isolated from the market,” he said. The chief executive said the company is considering further consolidation of manufacturing and a halt to certain product development efforts. He said Dataproducts will close one manufacturing facility by the end of the year, but declined to identify it.
He said there is a “chance” that Dataproducts will lose money in the September quarter but added: “I think we’ll break even, and maybe we’ll make a little money.”
Dataproducts officials said they see no relief from the industry slump on which they blame the company’s reversal in fortunes. The severe business decline in the computer industry is out of step with the remainder of the economy, making “this recession, or depression . . . something that’s totally new,” Tyson said.
He said the slump probably has a number of explanations. Among them, he said, were computer customers’ confusion by the variety of new products, decisions to wait for technological breakthroughs and the fact that some companies have been “overcomputerized” by the purchases of more equipment than they need.
Frank McQuaid, Dataproducts’ chief financial officer, said the work-force reduction alone may pare more than $60 million from the firm’s costs this year.
Separately, the company announced that it will market a printer that relies on a so-called dry ink jet process developed by Exxon Corp. The printer will be priced between $1,500 and $2,000 and will produce letter-quality impressions, Dataproducts said.