Monday June 16 4:13 PM EDT
Company Press Release
Source: Microdyne Corporation
Microdyne Corporation to Exit Networking Products Business
ALEXANDRIA, Va., June 16 /PRNewswire/ -- Microdyne Corporation (Nasdaq:MCDY) today said it will exit the networking products business and treat its
Networking Products Division as a discontinued operation.
``Despite our best efforts to achieve sustainable profitability in an extremely volatile market, the Networking Products Division has continued to incur substantial
losses over the past eighteen months,'' said Michael E. Jalbert, President and Chief Executive Officer of Microdyne. ``We have not been able to compete effectively
in the market, nor to achieve sustainable profitability at the division even following the restructuring of the division earlier this year. It is time to put this behind us,
move on, and focus on the many growth opportunities elsewhere in the company.
``Our goal is to find a buyer for the division,'' Mr. Jalbert said. ``Simultaneously, however, we are also exploring sale of the division's product lines individually.''
Mr. Jalbert said the decision to exit the networking products business was primarily one of choosing to concentrate on the company's two other divisions,
Aerospace Telemetry and Microdyne Support Services, both of which he said are well positioned to continue their current growth and profitability.
``Microdyne will be a somewhat smaller company initially,'' he said, ``though that should change as Aerospace Telemetry and Microdyne Support Services add new
customers and grow their existing relationships. Moreover, those two divisions have been consistently profitable.''
Mr. Jalbert said the decision to exit the networking products business came after a March 1997 restructuring yielded only temporary profitability. ``We thought we
had found the bottom of the market in March but, in fact, the adapter card business has deteriorated even further during the current quarter and the company's
analysis showed that, with the market continuing to change, losses could continue indefinitely.
``Since joining Microdyne in March, I and Microdyne's senior management team have spent substantial time examining scenarios under which Microdyne could
grow the networking products business profitably,'' Mr. Jalbert said. ``After three months, it is clear to me that all potential solutions have an uncertain probability of
success and would require a combination of time, management attention, and capital that can be better directed at our other divisions.''
In conjunction with the company's decision, Microdyne will treat its networking products business as a discontinued operation effective June 13, 1997, pending its
disposition. The company will record a charge against earnings in the third quarter of between $5 million and $8 million to cover expected losses and closing costs.
About Microdyne
Headquartered in Alexandria, Va., and with offices and representatives around the world, Microdyne Corporation is a diversified manufacturing, technology, and
services company.
Microdyne Support Services Division is a full-line provider of value- added, outsourced services. The division provides trained technical staff and
management of telephone technical support centers, in-warranty and after- warranty repair services, and special project staffing. The divisions' employees are
based in California, Indiana, and Virginia.
Microdyne's Aerospace Telemetry Division, located in Ocala, Fla., is the global premier developer and manufacturer of telemetry receivers; the specialized
high-frequency radios used in aerospace and satellite communications. The division has been responsible for technical innovations in the design and application
of telemetry products for nearly 30 years. Today, the division's products serve the needs of the aerospace industry, satellite communications providers, and
other users of high-precision, high- reliability long-range monitoring and control equipment.
Microdyne's Networking Products Division manufactures network connectivity products and provides a broad range of workgroup-level solutions for
Ethernet and Fast Ethernet networks. The division designs, manufactures, markets, and sells specialty products such as SAA and Token Ring adapters, and
minicomputer connectivity hardware. The division has operations in Virginia and California.
Microdyne had revenue of $80.8 million in the twelve months ended March 31, 1997, of which $45.1 million were attributable to the Networking Products Division.
Important Information for Investors
This release contains forward-looking statements that involve risks and uncertainties. Important factors that could cause actual results to differ materially include:
uncertainty associated with operating the Networking Products Division subsequent to an announcement that the division is to be sold or closed; the competitive
industries within which Microdyne operates; dependence upon licensees, suppliers and distributors; declining prices of networking products; limited product lines
and service offerings relative to other suppliers; the company's success in identifying, acquiring and incorporating commercially successful technology, products or
businesses, and in identifying and taking advantage of growth opportunities; and the risk factors listed from time to time in the company's SEC reports and filings,
including but not limited to the company's registration statement dated November 9, 1995; Reports on Form 10-Q filed during 1996 and 1997; and Report on Form
10-K for the fiscal year ended September 29, 1996.
Microdyne's shares are traded on the Nasdaq Stock Market; symbol MCDY. For additional information on the company, please visit Microdyne's web site at
www.microdyne.com.
SOURCE: Microdyne Corporation
Contact: Neal Sanders of Microdyne, 703-329-3700, ext. 3115 |
