Control Data Steps Up Effort to Reduce Costs
Control Data Corp. said it is “losing a lot of money” and has sent a letter to most of its 40,000 U.S. employees telling them to take four days off without pay during the next two months.
Also, the company confirmed Friday that it plans to eliminate another 1,500 jobs from its Magnetic Peripherals subsidiary by early 1986 in an effort to cut costs. That will leave the unit with 9,500 employes, or 46% fewer than the 17,000 who worked there last January.
Some of the 1,500 lost jobs will stem from the previously announced plan to phase out production at a factory in Santa Clara, Calif., which employs 1,100. Magnetic Peripherals, a Control Data-managed joint venture with Honeywell, Sperry and Bull Systems of France, makes computer peripheral products.
One-Third of Revenue
The unit represents the bulk of Control Data’s peripheral products division, which once accounted for about one-third of the company’s revenue. That is the division blamed for the company’s serious financial problems and the one taking the brunt of the cost cutting.
“The problems are concentrated in the peripherals company, and that’s where the biggest changes are taking place,” said Dick Reid, a Control Data spokesman.
Control Data President Robert Price said in a letter to employees that the company is “losing a lot of money. . . . In spite of past efforts and many additional planned actions, expenses for the fourth quarter, as projected, remain too high.” He said the company “must cope with an urgent and immediate need.”
Already, Control Data has sold, closed or otherwise arranged to rid its peripheral products division of six of 18 U.S. plants. The firm has also announced the sale of Ticketron, Electronic Realty Associates and Relocation Realty Services and has tried to sell its entire Commercial Credit subsidiary.
Control Data, a pioneer in the computer industry, may lose as much as $61 million in 1985, according to Piper, Jaffray & Hopwood. Estimated losses were placed at $40 million by E. F. Hutton.
