Underlining the parlous state of the business – it evidently was unable to find a buyer for the business, Control Data Corp yesterday announced the closure of its ETA Systems supercomputer business at a cost of $350m in write-offs and said that 3,100 employees would lose their jobs. It will take a total of $490m […]
Underlining the parlous state of the business – it evidently was unable to find a buyer for the business, Control Data Corp yesterday announced the closure of its ETA Systems supercomputer business at a cost of $350m in write-offs and said that 3,100 employees would lose their jobs. It will take a total of $490m in restructuring charges with its second quarter figures, but says that the actions should enable it to trade profitably in the second half of the year, and set the stage for sustained and growing profitability in 1990 and beyond. Other unspecified cuts are being made in the mainframe business, but Control Data remains committed to its Cyber 900 mainframe line, and says it is studying ways of incorporating some of the ETA-10 technology in the Cybers. It will continue to support existing ETA customers including the UK Meteorological Office in Bracknell, Berkshire but says that while the business was a technological success, the operation had sustained significant losses and was not expected to be profitable in the near future – last year, operating losses were about $100m. The decision is a major technological blow, not just to the company but to the US national interest: the US is now reduced to just one supercomputer manufacturer with machines in production, Cray Research Inc, where Japan now has three. ETA Systems was set up to produce the successor to Control Data’s Cyber 205 supercomputer, originally called the Star, and the Minneapolis company set it up as a separate company in 1983 with the idea of getting an outside investor to share the financial burden, but was never able to find one. The machines were late to market because of problems with the chilled CMOS chips fabricated for ETA by Honeywell Inc, and the business never recovered from the delay. Control Data also said an agreement has been reached that temporarily modifies earnings and net worth tests under its current bank arrangement: the agreement, which runs to May 31, limits borrowings to $30m and the letter of credit facility to levels currently outstanding of $105m, sufficient to meet all its immediate needs.