Emulex to Close Digital Storage Division Rather Than Sell It

Emulex Corp. said Wednesday it has canceled a deal to sell its Digital Equipment Corp. storage-products division to System Industries in Milpitas.

Emulex will instead close the division, sell its excess equipment and lay off its employees.

To date, about 130 employees have been laid off, and 30 other jobs will be eliminated through layoffs and attrition over the next several months, said Bob Corey, chief financial officer.

“As we got closer to each other, it became clear our structures were different and our main concern became support for the customers,” Corey said.

Brian Edwards, spokesman for System Industries, said that both companies agreed to stop the discussions after further talks were held.

In mid-June, Emulex said it would take a $15-million to $20-million charge against fourth-quarter earnings to close the plant and lay off its 160 employees because it was losing money in the Digital product line.

Emulex officials said they wanted to concentrate on their computer networking and semiconductor businesses. The aging Digital product line accounted for $28 million in sales for the nine months ended March 28, approximately a third of Emulex’s sales for that same period.

The Costa Mesa-based company announced June 22 that it had a tentative agreement to sell the assets of the Digital products division to competitor System Industries in a deal valued at $5.3 million.

Emulex will continue to lease the facility in Costa Mesa, where it employs 300 people. System Industries is considering taking over field service for certain storage-products customers, the companies said.