Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, September 16, 1995 TAG: 9509180041
SECTION: BUSINESS PAGE: A6 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: DAYTON, OHIO LENGTH: Medium
The Wall Street Journal reported Friday that the telecommunications giant will chop as many as 10,000 jobs from its computer subsidiary, AT&T Global Information Solutions, and take a $1.2 billion charge to pay for the cuts.
Citing company insiders it did not name, the newspaper said AT&T may get out of the personal computer business.
In July, the company announced a restructuring plan for the unit, saying it would cut jobs but not saying how many. The company said then that it was pulling back from the consumer PC market and narrowing its marketing efforts of larger computers.
On Friday, AT&T declined to comment on the Journal's report, which said the company planed to disclose specific actions next week. Spokesman Bob Farkas would say only that the July restructuring was ``on track.''
Investors appeared to applaud the news. On a day when much of the technology sector declined, AT&T stock rose 871/2 cents to $58.25 in trading Friday on the New York Stock Exchange.
``The reason is clear,'' said William Deatherage, analyst at Bear Stearns and Co. in New York. ``From an earnings perspective, GIS is hemorrhaging.''
The Dayton-based computer subsidiary lost $189 million in operating income in the second quarter, its largest quarterly loss since becoming part of AT&T in 1990. In the first quarter, the unit lost $143 million. It earned $45 million in the fourth quarter of 1994.
Its best performance goes back to the second quarter of 1992, when it posted $98 million in earnings.
The unit is the former NCR Corp., which AT&T acquired after a prolonged bidding fight for $7.4 billion. It makes large computers as well as laptops, automated teller machines and grocery store bar-code scanners.
Like other manufacturers who specialized in big computers, AT&T GIS has been hurt by the shift in demand from large mainframe computers to networks of PCs and workstations.
Analyst Tony Ferrugia of A.G. Edwards & Sons in St. Louis said the unit has been a drag on AT&T's overall performance.
``If that problem didn't exist, AT&T would be growing at a pretty darn good clip,'' Ferrugia said. ``The afterburners would kick in if you didn't have the losses at Global Information Solutions.''
by CNB