Pacific Enterprises to Cut 90% of Corporate Staff : Restructuring: The parent of Southern California Gas is selling off all of its non-utility subsidiaries.
Ending an ill-fated diversification into retailing and energy exploration, Pacific Enterprises Corp., parent of Southern California Gas Co., confirmed Monday that it will cut its 300-person corporate staff by 90%.
The troubled company had mentioned possible cuts in its headquarters staff in February, when it announced that it would sell off all non-utility operations. But the extent of the job cuts wasn’t disclosed until Chief Executive Willis B. Wood told a meeting of Pacific Enterprises employees on Oct. 16 that their ranks would be reduced from 300 people to 30 by next July.
The company said Monday that an undetermined number of people will be transferred to the gas company; others will be laid off.
“It always surprises me when companies do what they should do,” said David Fleischer, a Prudential Securities analyst, “but Bill Wood has been very aggressive--going back to the roots and admitting mistakes--sometimes at great cost.”
Southern California Gas, the nation’s largest gas utility, has remained financially strong over the years. But the parent company has been increasingly burdened by acquisitions begun in the mid-1980s, including oil and gas exploration properties and the Thrifty Corp. retail chains.
In the February announcement, Wood also suspended stock dividend payments, a particularly unpopular move among gas company retirees and others who had considered Pacific Enterprises shares to be a “widows and orphans” stock--one that pays generous dividends and is considered very safe.
In July, Pacific Enterprises sold Thrifty Corp.’s Pay’n Save unit to Payless Drug Stores, a subsidiary of Kmart Corp. In September, Thrifty completed the sale of the rest of its retail chains. The company reported a first-quarter charge of $475 million as its expected loss on the retail units.
Earlier this month, the company sold its oil and gas properties. It had already reported a second-quarter charge of $156 million to account for anticipated losses on its original $700-million investment.
Hank Spier, a Pacific Enterprises spokesman, said that the cost savings of the staff cuts had not yet been computed. The company has also declined to say when dividends might be restored.
Prudential’s Fleischer expects the company to restore a small dividend of about 60 cents a share sometime in mid-1993. The company’s debt is too heavy to pay more, he said.
Wood’s “costs of extracting himself from some of the non-utilities were extraordinary, much higher than I or Wall Street expected,” Fleischer said. “Why do they need a headquarters staff at all? They should change the name back to Southern California Gas, turn off the lights and send everybody home.”
Pacific Enterprises stock closed Monday at $18.25 a share, down 12.5 cents in New York Stock Exchange trading.
