Platinum to Layoff as Many as 300 Workers : Software: Despite $15-million restructuring effort, analyst says firm's survival chances remain questionable.

TIMES STAFF WRITER

Platinum Software Corp., whose top management was ousted last month amid allegations of accounting fraud, said Monday that it is going to shed as many as 300 employees, or more than a third of its work force, as part of a $15-million restructuring.

The troubled accounting software company, based in Irvine, also reduced its previously reported revenue for the past 15 months by $18.2 million.

Platinum acknowledged last month that it had been reporting potential sales as actual revenue. Co-founder Gerald R. Blackie and three other executives resigned April 18 when the company revealed the accounting irregularities.

Carmelo J. Santoro, a Platinum board member who replaced Blackie as chief executive, said Monday that the company had to cut its costs to ensure its operating expenses are in line with its expectations of lower revenue.

Of the 300 affected workers, or 37% of the company's 820 employees, about 100 will be laid off immediately, including as many as 35 at the company's Irvine headquarters, Santoro said. Another 200 employees will either be laid off later or will stay with operations that Platinum hopes to sell.

The company is negotiating to sell several of its software lines by the end of the current quarter, Santoro said, so it can focus on its core accounting products. It hopes to sell its international sales organizations for Europe (except Britain), Asia, Australia, New Zealand and Latin America.

Charles Phillips, analyst for Kidder, Peabody & Co. in New York, called the restructuring a necessary step for Platinum, but the company's survival remains in question.

"It's still a precarious situation," he said. "They still have $17 million in cash, and that is enough to go forward. They are doing the things they need to do in order to keep going, like reassuring customers."

Prompted by a shareholder lawsuit, Platinum began reviewing its accounting procedures earlier this year. That resulted in the $18.2-million adjustment to earlier revenue figures.

About 75% of those sales, however, or about $13.6 million in revenue, probably will be booked in subsequent quarters, said Bruce Edwards, a Platinum board member.

Last month's disclosure of the accounting irregularities triggered a probe by the Securities and Exchange Commission. That investigation is continuing, Santoro said Monday.

For its third fiscal quarter, which ended March 31, the company reported a loss of $13 million. That compared to a restated loss of $1.2 million for the same period a year earlier. Three-month revenue was $14.2 million, compared to restated revenue of $6.8 million a year earlier.

The company's fourth fiscal quarter, which ends June 30, will include a charge of $15 million to cover costs of the restructuring. That total does not include any potential liability for shareholder lawsuits.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World
66°