VitalCom to Cut Jobs, Replace Chief Executive
VitalCom Inc., a once-profitable company that posted losses after going public this year, announced on Monday a management shake-up, employee layoffs and other expense cuts.
The Tustin maker of communications networks for hospitals said its chairman, Donald W. Judson, 57, will resume his former duties as chief executive, replacing David L. Schlotterbeck, effective Jan. 1. Schlotterbeck, 48, had succeeded Judson as chief executive in August 1995.
Officials said 5% to 10% of the company’s work force of 189 employees were informed Monday that their jobs are being cut. The company said the layoffs affected workers in research and development, manufacturing, and general operations and administration.
VitalCom shares, priced at $12.50 a share in an initial offering in February, traded as high as $23.25 this year before sinking to below half the offering price on reports of widening losses. VitalCom stock closed Monday at $5.675 a share, up 12.5 cents, in Nasdaq trading.
The company attributed its lower-than-expected sales this year to problems in the marketplace. Officials said it struggled with turnover in its sales and marketing staff. And it found that it takes much longer to sell its systems--which cost about $450,000 apiece--than expected.
Officials, including Schlotterbeck, said Judson is taking over as chief executive again because he is especially skilled in sales and marketing--areas the company needs to emphasize. The company said Schlotterbeck made considerable contributions to its research and development, manufacturing and operations.
John Ederer, an analyst at Volpe, Welty & Co., noted: “Certainly, given the company’s track record over the last few quarters . . . things kind of slowed down considerably. It causes people to stand up and take notice--and it’s not all that surprising that changes are being made.”
Judson said investors expressed their disappointment in the price of the stock, but said the decline had nothing to do with Schlotterbeck’s resignation.
Schlotterbeck, named vice chairman, said he will assist the company in maintaining and developing major hospital customers.
The company aims to slash about $4 million annually from its budget, including $2.4 million from the payroll.
