Platinum Technology cuts staff, restructures

With a stock price languishing at a 52-week low of $US14 and a string of unprofitable years, it was probably only a matter of time before Platinum Technology International had to make some hard decisions.

Late yesterday, the US systems management and database software company announced it is sacking 15 percent, or 1,000 members, of its staff and taking a restructuring charge of between $90 million and $110 million in the first quarter of fiscal 1999.

The restructuring plan is expected to result in annual savings of about $90 million, according to a Platinum Technology statement.

The company reported a net loss of $2.5 million [M] for fiscal 1998 on revenues of $986 million. Platinum Technology has not had a profitable year since 1993, while aggressively notching up well over 50 acquisitions over the past few years.

Last year's purchases included data-modeling specialist Logic Works, training company Mastering and process-management software vendor Learmonth & Burchett Management Systems (LBMS), as well as a $500 million merger with Israeli security specialist Memco Software and the acquisition of Silicon Graphics' VRML (virtual reality modeling language) software developer Cosmo Software.

Tellingly, the company is opting to suspend its acquisition activity in favor of focusing on consolidating its existing business, Platinum Technology said in the statement.

As part of the restructuring plans, product development -- formerly divided up into five business areas -- will now be split between two main business units: Enterprise Management and Application Lifecycle & Knowledge Management, the company said.

Platinum Technology also plans to shut offices that are "close in proximity" to one another, the company statement said. A report in yesterday's Wall Street Journal puts the number of offices set to be closed at twelve.

The main planks of the company's restructuring are refocusing on Platinum Technology's core businesses and ensuring that every customer has a single point of contact within the organization's sales, support and consulting operations, the company said. Key software to Platinum Technology going forward will be its products based on IBM's DB/2 databases -- one of the company's traditional strengths -- and software suites (for instance, enterprise management suite ProVision and application development management suite ADvantage), as well as the vendor's data warehousing software.

Somewhat ironically, earlier this month, Platinum Technology resolved a long-running dispute over company names with ERP (enterprise resource planning) software vendor Platinum Software. Part of the origins of the dispute stem from when similarly named Platinum Software was in severe financial difficulties several years ago. At that time, Platinum Technology took out advertisements in the press to stress that it was a completely different eentity from Platinum Software.

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