Emulex Merges Units to Meet Competition : Some Employees Will Be Laid Off as Result

Responding to pressures from competitors like AST Research in Irvine, Emulex Corp. said Thursday that it has merged its Persyst brand retail computer products division into its two primary operating units, which serve manufacturers.

The Costa Mesa company said it will continue to produce and service the Persyst retail product line.

But Emulex acknowledged that competition at the retail level has forced it to focus its production and sales more on those who make the final products and on corporate markets, particularly International Business Machines Corp. and makers of IBM-compatible products.

“We can no longer expend the same level of resources to sell . . . products into the retail marketplace and realize an acceptable return for our investment,” Steve Frankel, Emulex president, said in prepared remarks.

The reorganization will mean that some employees--”significantly less than 5%” of the 845-person work force--will be laid off, said Michael J. Lewis, the company’s chief financial officer. He would not reveal the number of employees who will lose their jobs.

The Persyst unit had started out as a retail-oriented operation and accounted for 20% to 23% of the company’s revenues, Lewis said. But in the fiscal year ended last June 29, he said, only 40% of the Persyst sales came from retail customers.

The company’s overall revenues and net income have been relatively flat for the last two years, and Lewis said competition from the Far East and from AST Research had forced Emulex to price its retail products at a level that was “not acceptable.”

AST, he said, has built up a big market share by its early entry into the marketplace with products that expand the capabilities and performance of IBM and IBM-compatible personal computers.