Wyse to Lay Off 560; President Resigns
Wyse Technology Inc., struggling in the fiercely competitive market for IBM-compatible personal computers, announced Thursday the resignation of President and Chief Operating Officer Phillip E. White and disclosed plans to dismiss about 560 workers.
The San Jose, Calif.-based company also said it expects to report a loss for the nine months ended Dec. 30.
Bernard Tse, chairman and chief executive of Wyse, will assume White’s day-to-day responsibilities at the computer manufacturing company.
White, who joined Wyse in 1986, left to become chief executive of Informix Corp., a database management and software products company based in Menlo Park, but will remain on Wyse’s board.
“White is extremely good and competent, but he became frustrated at Wyse because it is in a bad situation that’s going to get worse” because of stiff competition, said Michael Murphy, editor of the California Technology Stock Letter.
Wyse has a good distribution outlet through BusinessLand, Murphy said, but needs to diversify its product line and come up with a clone of International Business Machine’s more advanced personal computer.
“I think they will cut more jobs,” Murphy said. “They have to do some serious strategic reorienting. I wouldn’t be surprised to see them shut down some product lines.”
Wyse built a lucrative business selling computer display terminals, but its efforts to translate that success into the market for complete PCs has largely failed, other analysts said.
Wyse said it would slash the 560 jobs--about 15% of its work force--through cutbacks and attrition in reaction to a sharp decline in third-quarter sales. The company said the reduction includes about 400 positions in its Far East manufacturing operations.
Wyse said sales in the third quarter ended Dec. 30 would be between $60 million to $70 million. That is less than half what it forecast in early October, computer analysts said.
It said a loss in the quarter would wipe out profits of $11.7 million, or 78 cents a share, earned in the first six months.
Wyse’s shares closed down $1.00 at $6.625 in trading on the New York Stock Exchange.
Computer analysts blamed the company’s problems on several factors--lack of PC expertise, a late entry into the field and initial quality problems.