ALR to Lay Off 100 Employees, Cut Pay at Top : Computers: Advanced Logic Research anticipates first quarterly loss. Upper-echelon salaries to be chopped 5% to 30%.
Anticipating its first quarterly loss and continued personal computer price wars, Advanced Logic Research Inc. is laying off 100 employees and cutting its top employees’ pay by 5% to 30%.
Company executives said Tuesday the restructuring was a response to an anticipated loss for its fourth quarter ended Sept. 30. The company warned last month that the loss was coming, but it did not anticipate layoffs then.
“This is something we should do because of the competition,” said Gene Lu, chief executive, who will take a 30% cut on his $400,000 a year salary. “There is probably no good time to do this.”
The layoffs, which have already been implemented at the company’s headquarters in Irvine, will hit roughly 15% of ALR’s worldwide work force of 650. Employees will receive one week’s severance for each year of service. The pay cuts apply only to employees with pay above $50,000.
About 48 out of 450 jobs in Orange County were cut, said Ron Sipkovich, chief financial officer. Another 50 or so will be cut at the company’s international subsidiaries.
ALR stock closed at $3.75 a share Tuesday, down 25 cents in NASDAQ trading. The closing price was far below the 52-week high of $14.50 a share reached last Oct. 18.
Lu said the quick action in response to the loss will help ALR compete better on the low end of the market.
ALR’s action is a sign of how competitive the PC industry has become during the past several months. CMS Enhancements Inc. in Irvine, which had a joint venture to sell computers with a South Korean manufacturer, pulled out of the venture in June because of heavy losses.
ALR was once one of the industry’s hottest so-called clone-makers, second in Orange County only to AST Research Inc., which is about four times ALR’s size in revenue.
“We’re certainly taking this action so that we don’t become a victim” of the price cuts launched by Compaq Computer Corp., International Business Machines Corp. and other firms during the summer, Lu said.
ALR’s fourth-quarter loss is expected to be less than the $3-million net income the company reported for the first nine months of its fiscal year, company officials said. Sales for the quarter are expected to be 10% less than the company’s $52.7 million in sales for the third quarter.
For the nine months ended June 30, the company reported earnings of $3 million, or 26 cents a share, compared with $10.5 million, or $1.02 a share, a year earlier. Revenues were $158.5 million, compared to $153.6 million a year earlier.
Lu said the company hopes the moves will restore it to profitability in the current first fiscal quarter, and he said the company will continue to roll out new lines of PCs to stay competitive.
