EARNINGS : Wang Reports $375-Million Loss, Suspends Dividends
Wang Laboratories Inc. on Monday reported a $375-million fourth-quarter loss, announced suspension of dividends and said it had fallen into violation of a bank lending agreement.
Analysts said the computer company was in such weakened condition that it would ordinarily be sold, except that the Wang family controls 80% of the stock voting rights. In addition, the company is still burdened with lines of business that are not attractive to potential buyers.
Most of the loss stemmed from a $237-million pretax charge to cover the cost of a restructuring that involved closing factories, cutting jobs and lowering the book value of outdated assets.
But the computer company also lost money on its ongoing operations.
“A third of (the loss) is current operations, and clearly they have to reduce their expense structure further,” said John W. Adams, chairman of Adams, Harkness & Hill in Boston. “I’m sure they’re aware of it. The computer business has just gotten to be more and more competitive.”
The latest bad news pushed Wang’s stock down to $6.125, down 25 cents a share, on the American Stock Exchange.
Wang stock has lost more than 80% of its value since early 1984, when it traded above $35 a share.
Seeks New Terms
The most pressing crisis for Wang is that the loss in its fourth fiscal quarter reduced its net worth below the level required by its commercial banks under a $300-million revolving credit agreement.
Wang said it had received waivers from the banks through Aug. 10 and was continuing to negotiate new terms that would give it some breathing room. The company said it had hired Lodestar Group and Salomon Bros. as financial advisers.
Founded in 1951, Wang ranks 145th on Fortune magazine’s list of the 500 largest American industrial companies, but in recent years the computer maker has shown a pronounced limp.
After building a reputation on office word processors in the 1970s, officials have watched sales slowly eroded by the powerful personal computers and workstations that have taken their place. Its minicomputer business has likewise faltered.
Wang is trying to make a comeback by focusing on four types of customers: financial services, government, manufacturing and professional services. Its most promising asset is Freestyle, a way of interacting with a personal computer by using an electronic pencil instead of a keyboard or “mouse.”
For the quarter ended June 30, the net loss was $374.7 million on revenue of $783.7 million, contrasted with earnings of $13.4 million on $822.8 million in revenue for the same period a year ago.
The company reported a net loss of $424.3 million for all of it its 1989 fiscal year, contrasted with net income of $92.7 million on revenue of $3.07 billion in 1988.
