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Article #153

Control Data Closes ETA Systems, Inc.

#153
From: Glen Alexander
Date: Mon, 17 Apr 1989 21:52
96 lines
5646 bytes

                  CONTROL DATA ANNOUNCES A SERIES
                OF ACTIONS TO IMPROVE PROFITABILITY



MINNEAPOLIS, April 17, 1989 -- Control Data Corporation today
announced a series of actions that will improve its profitability.
The actions include the discontinuance of ETA Systems (ETA), the
Company's supercomputer business, the streamlining of its CYBER
mainframe business, reducing the size of the corporate staff, and a
temporary realignment of its bank financing agreements.
    The actions will result in restructuring charges of approximately
$490 million and a workforce reduction of approximately 3,100
employees.  Of the estimated charges, $350 million is associated
with the discontinuance of ETA.  Actual charges will be recorded in
the second quarter.
    In announcing the actions, Robert M. Price, Control Data's
chairman and chief executive officer, said, "By eliminating the
ongoing losses in supercomputers and streamlining the computer
systems business, the Company will be able to focus its energies on
providing CYBER products and services to meet the needs of its
customers.
    "At the same time," he said, "we will build on our strengths in
the government systems business, the Imprimis Technology data
storage business, and continue to move aggressively in Control
Data's profitable and growing services businesses such as Arbitron,
Micrognosis and Energy Management Systems."
    Price said that the Company's actions should result in a
profitable second half of 1989 and "set the stage for sustained and
growing profitability in 1990 and beyond."
    The Company said that while ETA was a technological success, the
operation sustained significant losses and was not expected to be
profitable in the near future.  In 1988, the supercomputer business
had operating losses of approximately $100 million.
    Control Data will continue to support its current ETA customers,
Price explained.  In addition, the Company is evaluating how
selective parts of the ETA technology can be used in future products
to enhance the performance of the upper-end CYBER mainframes.
    "In disposing of the ETA assets and in licensing ETA
technology," Price said, "every effort will be made to achieve the
maximum benefit, taking into account the continuing needs of
existing customers and the value of the proprietary technology
involved."
    Control Data will focus its computer systems business on the
needs of its current customer base and specific segments of the
engineering, scientific and information markets where it has
significant strengths for future growth.  The Company said that this
will allow it to increase the value-added content of its CYBER
mainframes to serve its customers better, while substantially
improving the financial performance of the CYBER business.
    Control Data said that an agreement has been reached which
temporarily modifies the earnings and net worth tests under its
current bank agreement.  The interim bank arrangement, which is
valid through May 31, 1989, limits borrowings to $30 million and the
letter of credit facility to levels currently outstanding of
$105 million.  This facility plus current cash balances are adequate
to meet the Company's immediate needs.  The cash requirements of the
Company's restructuring actions are significantly less than the
charges against the results of operations and will occur over time.
However, they will require financing beyond that available under the
current agreement.  The Company has begun discussions for a new
financing arrangement which, together with operating cash flows and
asset sales, is expected to satisfy longer-term needs.
    In looking to the future, Price said, "We are building a new
Control Data based on the concept of using computers to solve
important and complex problems."
    Price said that despite the difficulties of the past three
years, Control Data has made excellent progress in services,
especially in the area of application-specific systems integration.
    "Revenues from such businesses have nearly doubled during that
time," he said.  "Micrognosis revenues, for example, have grown
40 percent on average over each of the past five years.  And, last
year, the Company's Government Systems group received its first
major systems integration contract with the award of the U.S. Air
Force's Advanced Tactical Air Reconnaissance System."
    Other services businesses continue to grow as well, Price said.
Business Management Services has rapidly expanded its customer bases
for tax filing and human resources management systems.  The
acquisition of SAMI in 1987 strengthened the position of Arbitron
Ratings in marketing information services.
    "The potential of all these businesses is such that they should
continue to see excellent growth in revenues and profits," Price
said.  "Today's announcement is a declaration that Control Data is
committed to realizing that potential and achieving our stated goal
of sustained profitability."

                               - 0 -


-- 
Glen Alexander
Control Data Corporation, Atlanta Georgia, 30328
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Path: arc1-ca.pugleaf.net!utzoo!dptcdc!jarvis.csri.toronto.edu!mailrus!uflorida!gatech!prism!cccdcga
From: cccdcga@prism.gatech.EDU (Glen Alexander)
Newsgroups: comp.sys.cdc,comp.arch
Subject: Control Data Closes ETA Systems, Inc.
Keywords: supercomputers
Message-ID: <492@hydra.gatech.EDU>
Date: 17 Apr 89 21:52:05 GMT
Organization: Control Data Corporation
Lines: 96