A reduction in orders from a major customer and weak international sales are being blamed for Sequent Computer Systems Inc’s prediction yesterday that its second quarter results would come in significantly below management expectations. Sequent immediately put plans for restructuring in place, saying it would cut between 200 and 250 jobs worldwide and make changes […]
A reduction in orders from a major customer and weak international sales are being blamed for Sequent Computer Systems Inc’s prediction yesterday that its second quarter results would come in significantly below management expectations. Sequent immediately put plans for restructuring in place, saying it would cut between 200 and 250 jobs worldwide and make changes to its business model. Sequent said the Boeing Company had reviewed its current and near-term system requirements for its DCAC/MRM manufacturing resources project, which would lead to a sharp reduction in revenues from Boeing during the remainder of 1998. Boeing reported yesterday that the Asian economic crisis was expected to result in 150 fewer airplane orders across the industry from 1998 through 2002 than it had anticipated. The aircraft company spent $155m with Sequent in 1997, $80m in the second half of the year. Sequent was also affected by Asian weakness, though as Asia represents only a small part of its business it was more worried by a corresponding downturn in European sales, which had been strong in the previous quarter. Sequent’s chief financial officer Bob Gregg said that he was expecting a loss in the range of $0.25 to $0.35 a share, on revenues in the range of $185m and $195m. The figures don’t include some non-recurring charges and a restructuring charge in the range of $55m to $60m. The reduced Boeing revenues will affect the company in the second half of 1998, and are likely to mean that Sequent’s revenues this year will be roughly flat compared with 1997. Excluding Boeing, Sequent’s remaining business was still growing at around 15% for the year, he said. By restructuring, Sequent hopes to reduce its annual expenses rate by up to $45m, in addition to the $23m in cuts it had already planned. Sequent’s board of directors authorized the repurchase of up to 4 million shares of Sequent stock. The second quarter closes on July 4. Sequent said it would focus its efforts on its Intel-based servers over the year, releasing a Xeon-based version of its NUMA-Q 2000 server in the second half, and its NUMACenter product designed to run Unix and Windows concurrently on the same system (CI No 3,363). It also plans to launch a new midrange line, the Numa-Q 1000, by year-end to run either Unix or NT, and said it would be one of the earliest to market with 64- bit Merced servers running the IA-64 Unix implementation it is co-developing with Compaq/Digital.