Company suffers from Y2K effectgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I posted a similar story a while ago and I suppose that there will be more and more as time moves along.
This from the Ottawa Sun:
Thursday, March 18, 1999
JetForm pulls drastic moves
Firm cuts jobs, takes $24M in charges
By SUSAN TAYLOR, Ottawa Sun STAFF CUTS at embattled JetForm Corp. will save the Ottawa-based company $3 million to $4 million a quarter as it struggles with slumping sales.
The electronic forms software company announced yesterday it's cutting 56 staff and will take a onetime $24-million restructuring charge in the fourth quarter.
JetForm expects a $20-million charge to write down assets and an $8-million restructuring charge. A $4-million recovery of deferred taxes will partially offset those charges. The writedown covers goodwill and assets from acquisitions of Eclipse Corp. and Proactive Systems Ltd. and its affiliates.
"What they're doing is not so much cutting to guarantee profitability, but cutting to make sure they are adequately positioned for future opportunities," said Brandon Osten, an analyst with Sprott Securities.
The cutbacks come on the heels of a painful third quarter, which carried a loss of $7.2 million. At that time, the firm's executive ranks were shuffled and three senior executives, including chief financial officer Phil Weaver, were laid off.
JetForm is suffering from stalled sales as customers grapple with the Year 2000 bug. Companies selling large software systems are being hit by slowdowns as customers stop buying new products while working on Y2K compliance.
The bulk of layoffs come in sales and marketing and administration, which took a 24% cut. Employees in research and development -- which makes up 32% of the firm's head count -- and services were less affected, facing a cutback of about 5%. About nine senior executives were cut.
About half the cuts, which leave the company with 679 employees, are in JetForm's Ottawa headquarters. The remainder are from other North American offices and those in Europe and Asia.
"We anticipate no further staff reductions or restructuring announcements," JetForm chief executive John Kelly said during a conference call. With the changes, Kelly expects the company to break even in the next three quarters.
While speculation is swirling about JetForm as a takeover target, there are no discussions under way, Kelly said. He did say the firm had a list of white knights.
Hummingbird Communications Ltd., which has plans to purchase PC Docs Group International Inc., is seen as a lead contender because it wants to acquire workflow software, which JetForm develops.
Despite its faltering stock, JetForm is bolstered by strong assets -- it has $50 million in cash, $55 million in receivables and an untapped $20-million line of credit.
Kelly said analysts, meanwhile, have endorsed the company's new Internet strategy.
"We do have significant post-Y2K possibilities," he said. "We have the right technology, the right people and the right financing to carry us forward."
JetForm shares were up 15cents yesterday on the TSE to close at $6.10.
-- Mike Lang (firstname.lastname@example.org), March 18, 1999
Everyone is going to suffer the Y2K effect, whether they like it or not (with the exception of possibly the Amish, and maybe some African bushmen).
Here's another biggie:
"$16B deal to create nation's eighth largest bank, New England powerhouse
- The deal will also result in a combined loss of up to 5,000 employees."
What do these mega-businesses do when they have exorbitant Y2K expenses? Takeover another company using worthless stock, close dozens of offices, layoff thousands, and call it a competitive merger.
It's going on all over the place, and it will continue to increase until we find a way to stop it. These companies will inhale smaller business like dust in the wind.
-- @ (@@@.@), March 19, 1999.