Ashton-Tate to Lay Off 15% of Its Work Force : Software Firm Says It’s Expecting a $14-Million Loss in Current Quarter

Hard hit by the sluggish sales of its latest personal computer database software, Ashton-Tate Corp. said Tuesday that it will lay off at least 260 employees--15% of its work force--beginning next week.

The Torrance-based company, which last month announced a second-quarter loss of $19.8 million, also said it expects to report an additional loss of more than $14 million for the current quarter ending Sept. 30. Ashton-Tate declined to offer precise figures, but some analysts estimated that the loss would be in the $15-million to $20-million range.

In over-the-counter trading Tuesday, the company’s stock fell 50 cents a share to close at $13.

Analysts said the latest developments at the nation’s No. 3 independent publisher of personal computer software underscore the mistake the company made with its premature release in October of an error-riddled update of its longtime top-selling dBase software. The dBase database programs--which sort, store and index large volumes of electronic data--have been the foundation of the company and still account for more than 60% of its sales.

Complaints about “bugs”--computer lingo for mistakes--in the new dBase IV program have seriously slowed sales, and the company has worked feverishly on a revised version. But Ashton-Tate Chairman Edward M. Esber Jr. refused Tuesday to predict when the new program would be available.

Compounding the company’s problems, analysts said, is that the once-torrid sales pace of personal computer software generally has slowed significantly since last year and is expected to be no better, or even worse, at least through next year.

Esber declined to offer details on the pending layoffs, saying only that the entire worldwide work force would be affected, not just the staff in the Torrance headquarters. The company declined to reveal what severance pay would be offered.

Layoffs Necessary

“This is tough medicine,” Esber said. “But they (the layoffs) are necessary to return the company to profitability.”

These were not the first steps Esber has taken in his attempt to turn Ashton-Tate around. Last month, he announced the sudden resignation of company President Luther Nussbaum. Although Esber declined to blame Nussbaum outright for the company’s problems, he has said the current situation requires him to personally take command of all operations.

“He’s taking the right steps to save the company,” said Tim Bajarin, an analyst with Creative Strategies, a high-tech market research firm in Santa Clara, Calif. “But it’s still so bizarre to understand how this company got so far out of step.”

Analysts and company officials agree that Ashton-Tate’s problems stem from its release of dBase IV. Although the introduction was delayed several months to correct persistent bugs, complaints still surfaced and sales suffered.

The company tried to pump up business by offering special incentives to dealers. However, Esber acknowledged in June that the effort, generally known in the trade as “channel stuffing,” was largely a failure and resulted in mounting inventories of dBase IV on dealers’ shelves.

At last count, Esber said, dealers still had about a six-week supply. Meanwhile, sales of earlier versions of dBase, including dBase III-plus, have been slow as well.

Analysts say Ashton-Tate’s once-commanding share of the market for database management software is gradually eroding as hard-charging competitors, eager to take advantage of the company’s recent series of slips, have moved in. Ashton-Tate, which once enjoyed a share of 80% or more of the PC database software market, now has about a 60% share, according to David Bayer, an analyst at Montgomery Securities, a San Francisco brokerage firm.

Extensive Testing

“The company is in a very critical position,” said James Weil, a high-tech stock analyst with Soundview Financial, a brokerage firm in Stamford, Conn. “The key to the future now is whether they can successfully launch a revised dBase IV.”

Esber said Tuesday that the company will not release a new version of the program until it is thoroughly tested and certified. He said the current testing process, unlike the one used last year, would include extensive evaluation by customers, a system called “beta” testing.

“There was no real beta testing” last year, Esber acknowledged. “We did some testing outside our plant and some inside, and we convinced ourselves it was beta testing. But it was not tested to my satisfaction. . . . The key for us now is to ensure that dBASE IV 1.1 meets significant quality standards.”