Wang Labs Will Cut 1,000 Jobs, Reduce Salaries 6%
Wang Laboratories said Tuesday that it would eliminate 1,000 jobs and cut salaries by 6% as the office computer maker prepared to announce a quarterly loss of more than $30 million.
According to Wang spokesman Michael Ferrante, about 400 jobs will be eliminated through attrition, while 600 will involve layoffs resulting from the consolidation of the company’s customer service and manufacturing distribution operations. Wang employs about 30,000 people.
In addition, Wang said it would immediately reduce the pay of all of its salaried U.S. workers by 6%. The pay reduction will be in force through June 30, it said, and will be partially offset by grants of Wang stock.
The pay of hourly workers will not be cut, Ferrante said.
Continuing Losses
Wang said the actions are designed to reduce expenses by 4% to 5%, or about $50 million, and were prompted by continuing losses.
Until 1985, when the entire computer industry was hit by a severe sales slump, Wang had been a leader in word processor technology, selling its equipment to more than 80% of the nation’s 2,000 largest companies.
Despite what it called record sales, the firm said it expected to report on Jan. 20 a loss for the quarter ended Dec. 31 that will exceed the $30-million loss in the previous quarter.
Ferrante said he did not know whether that projected loss was from normal operations or included special, one-time charges.
“The primary reason for the loss is that revenues did not achieve the levels we had planned,” President Frederick A. Wang said in a statement.
“The two key issues that must be addressed immediately are expense control and order rates. In addition, we will evaluate our asset levels in light of the operating environment,” he added, referring to the continuing computer industry slump.
Under the stock grant program, employees whose pay is reduced and who are continuously employed by the company through the end of 1987 will be given the right to receive Class B common stock equal in value, at $11.63 per share, to one-half of the amount by which their salary is reduced.
The employees will receive stock equal to the other half of their salary reduction if they remain employed at the end of 1989, the company said.
The company estimates that 1.3 million shares will be distributed to employees under the program.
Frederick Wang said the restructuring is aimed at restoring profitability by Wang’s fourth quarter, which ends June 30, “an objective which the company is determined to achieve.”
Boosting Sales Force
The company also said it is increasing its sales force by 25% worldwide in an attempt to increase orders.
For the year ended June 30, 1986, Wang reported net income of $50 million on revenue of $2.6 billion.
Last July, Wang announced the elimination of 1,600 jobs as part of another restructuring designed to cut costs.
Late last year, 66-year-old An Wang, a Chinese immigrant who founded the company in 1951, appointed his son, Frederick, 36, as president, a move that analysts say should give the company more operational prowess.
