ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, February 16, 1996 TAG: 9602160021
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: ST. PETERSBURG, FLA.
SOURCE: Bloomberg Business News
Home Shopping Network Inc. said Thursday it will eliminate 100 jobs, reshuffle management and raise badly needed cash, as it reported a $25.7 million fourth-quarter loss, far larger than expected.
It is doubtful, but not clear, whether the changes would affect the company's operations in Salem, according to a company spokeswoman.
The changes are the biggest since Barry Diller took over as chairman in November with the stated mission to transform the television retailer and its parent, Silver King Communications Inc., into a major broadcast network.
Diller first must patch up Home Shopping. The loss at the end of 1995 was the television retailer's fourth straight quarter of negative numbers. To raise money, it is seeking to place privately $100 million in debentures.
``Right now, there is not a great deal of free cash flow,'' said Edward Hatch, an analyst at UBS Securities.
Shares in St. Petersburg, Fla.-based Home Shopping fell 50 cents Thursday, closing on the Nasdaq Stock Market at $9.25. Slightly more than 1 million shares were traded Thursday, more than three times the three-month daily average of 357,800.
In earlier moves to cut costs and reposition its merchandise, the company closed its Reno, Nev.-based distribution center and slashed its inventory by 47 percent.
The proposed job cuts, which amount to 2.5 percent of Home Shopping's 4,000-member work force, will trim operating expenses by about $20 million this year, the company said.
Company spokeswoman Louise Cleary said Thursday that the cuts are being made at Home Shopping's Florida operations, and that, as far as she knows, the company's Salem fulfillment center will not be affected.
The fourth-quarter loss amounted to 28 cents a share, much wider than the average estimate of a 1-cent-a-share loss from four analysts polled by Zacks Investment Research. A year ago, it earned $1.8 million, or 2 cents a share.
The latest results include pretax charges of $12.1 million to write off inventory; $2.1 million to close the Reno center; $4.7 million for severance pay; $3.2 million to set aside reserves for pending litigation; and $7.2 million for equipment and miscellaneous charges.
Sales fell 4.4 percent to $288.5 million from $301.7 million.
For the year, Home Shopping's loss was $61.9 million, or 69 cents a share, including $42.3 million in pretax charges, compared with year-earlier profit from operations of $17.7 million, or 19 cents. A charge of $924,000, or 1 cent a share, made 1994 net income $16.8 million, or 18 cents.
Home Shopping said revenue fell 9.6 percent to $1.02 billion from $1.13 billion.
Under the plan announced Thursday, Home Shopping created a nine-person executive committee that reports to Chief Executive and President Jim Held, whom Diller brought to the company last year.
Held used to work at QVC Inc., the company that Diller built into the dominant shopping channel.
``When we arrived in December, it was quickly apparent that a dysfunctional organizational structure was the heart of many of HSN's troubles,'' Held said. ``We had to move quickly to address expenses and inventory.''
Staff writer Megan Schnabel contributed to this article.
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