Subsidiary That Rockwell Sold Was Losing

Rockwell International Corp. has been refocusing itself for several years, selling units that no longer fit with its core businesses and buying businesses that do.

One operation it shed earlier this year, its Santa Barbara-based computer networking systems subsidiary, was sold for $11 million cash to Osicom Technologies Inc in Santa Monica.

Although that won’t add much to the bottom line for a $12-billion a year company like Rockwell, the deal may have been an especially good one for the Seal Beach-based company because Osicom disclosed this week that the unit lost $15 million in the last two years that Rockwell owned it. Osicom says it is not concerned about the losses, though, and expects the operation to be profitable by the end of the fiscal year.

The profits will come via an energetic cost-cutting program, said Sharon Chadha, Osicom’s chief financial officer. “We run the company a lot differently than Rockwell,” she said. “The rich daddy is dead. We’re the wicked stepmother.”

The cost cutting started when 28 of the unit’s 98 workers were laid off as a condition of the sale. But Chadha says her “stepmother” remark shouldn’t be taken as a threat to the workers who stayed on. Osicom, she said, has told the remaining network systems employees they’ll get a 20% equity stake in the unit after two years. “That’s not being a wicked stepmother,” she says.

Whatever the workers may think, shareholders apparently like Chadha’s attitude. The price of Osicom’s stock has more than tripled on the promise of the new business the Rockwell unit would bring.

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John O’Dell covers major Orange County corporations, manufacturing and economic issues for The Times. He can be reached at (714) 966-5831 and at john.odell@latimes.com