MAI to Cut Its Staff by an Additional 400 : Layoffs: New reductions come less than three months after eliminating 400 jobs as part of a new strategy.
TUSTIN — Less than three months after eliminating 400 jobs as part of a new company strategy, MAI Systems Corp. said Wednesday that it plans to dismiss another 400 employees nationwide.
Fred Anderson Jr., president and chief operating officer, said the additional staff reductions are part of a business plan MAI adopted to help it make the transition from manufacturing its own computers to selling machines made by other companies.
“The bottom line is that we find it’s appropriate to accelerate our transition to a value-added reseller and system integrator,” Anderson said. “You don’t need as many people involved in engineering and manufacturing when you’re moving away from designing and manufacturing your own hardware systems.”
The earlier layoffs comprised about 12% of MAI’s work force, leaving the Tustin-based company with about 3,000 employees. Those job cuts were concentrated among manufacturing, engineering and field service workers, and about two-thirds of them affected employees in Tustin.
Of the latest job reductions, about 40% are scheduled in Tustin, Anderson said. Most are engineering and manufacturing jobs, while the cuts in other parts of the country included many sales and service jobs, he said.
“We’re reorganizing our field operations,” Anderson said. “We don’t need the whole organizational structure, and we’re focusing on (fewer) markets, where we believe we can be successful.”
The reorganization may also require an extraordinary charge against earnings in the quarter ended March 31, Anderson said, although it would not be as large as a $59.7-million charge--related to its decision to end computer manufacturing--that MAI posted as a reserve in the fourth quarter of fiscal year 1990, ended Sept. 30.
“We don’t know if the earlier one is still adequate,” Anderson said.
The company reported a loss of $68.8 million for the fourth quarter of 1990, including the one-time charge. It lost $64.5 million overall in fiscal 1990, and lost $39.9 million the previous year.
MAI decided to abandon computer manufacturing after company chairman and New York financier Bennet S. Lebow’s costly, unsuccessful hostile takeover bid for Prime Computer Inc., a Natick, Mass., minicomputer maker.
Since then, MAI has been assembling products made by outside vendors, and developing software for special industries--such as manufacturing, distribution, health care and retail--that it sells as a package with computer systems made by the Hewlett-Packard Co.
MAI signed a $250-million, three-year agreement earlier this year with the Palo Alto computer manufacturer to buy and then resell HP’s machines.
MAI also announced Wednesday that it had successfully renegotiated credit agreements with major lenders to avoid default. A $15-million principal payment that was due March 31 has been reduced to $6 million, as has a $15-million payment that would have come due Sept. 30. The outstanding principal, part of a $77-million loan package, will now be due March 15, 1992, about six months earlier than under the previous agreement.
MAI stock was unchanged Wednesday, closing at 75 cents per share.
