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Cipher Data Products Will Lay Off 212, Freeze Wages

San Diego County Business Editor

Citing continued downturns in the minicomputer industry, Cipher Data Products said Friday that it will lay off 212 employees as part of a cost-reduction campaign.

The layoffs follow a work-force cut of 5%, or about 90 employees, last April, and trim Cipher Data’s labor pool to about 1,400, still about 100 workers more than a year ago. Officials last April “didn’t have any expectation of the prolonged duration of the slump” in the industry, according to Norman Farquhar, Cipher’s vice president-strategic development.

Since then, Cipher executives have “taken a firm look at everything we’re doing (and) we don’t see the minicomputer or technology industries getting any better.”

Other cost-reduction measures include a temporary freeze in wages and salaries for all employees.

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Despite the slump, the Scripps Ranch-based magnetic tape peripherals maker will still report increased sales and earnings for the year ending June 30, according to Farquhar.

Sales are expected to increase about 34% to $168 million while earnings could rise as much as 27% to more than $15.5 million, he said.

No additional layoffs are anticipated, “but, obviously, we’ll be flexible,” he said.

“It’s bad news that these things have to occur. But the perception on (Wall) Street is that it is good news because Cipher’s recognizing a problem and taking care of it. It will get better from here.”

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However, Cipher’s stock closed down $1.25 per share at $16.75 in over-the-counter trading Friday.

Nearly two-thirds of the layoffs will occur in Cipher Data’s Garden Grove plant, while the San Diego facility will absorb about 30%.


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