Troubled Geac cutting 500 jobs
Showwei Chu 04:03 EDT Tuesday, October 17, 2000
Troubled Geac Computer Corp. Ltd. is cutting 500 jobs and taking a $28-million accounting charge in the fiscal second
quarter in a restructuring bid that could lead to the sale of all or part of the company.
Geac, Canada's largest software company, is also trying to save $60-million in annual costs beginning in the third quarter.
It hopes to achieve that in part by laying off 350 people and eliminating another 150 jobs through attrition, leaving it with
4,200 employees. Those cutbacks will account for a $20-million charge in the second quarter.
The Toronto-based company, beset by turmoil in the executive suites and buffeted in the stock market for months, is also
still for sale.
"We looked at this business by business because some of our businesses have a real future to them," William Nelson,
Geac's chairman and interim chief executive officer, said yesterday in a conference call. "We want to nurture them. Some
of our businesses, we're milking them anyhow, and since they're not getting anywhere, we might as well milk even more.
And a couple we probably should shoot -- gracefully of course."
Mr. Nelson said Geac's financial adviser, CIBC World Markets Inc., is preparing a data room after it disclosed last month
that two companies are interested in buying all or some of the company.
He reiterated that Geac doesn't expect bids until November or December, and a completed sale probably won't happen
until January or February.
"The board, through a special committee, is prepared to recommend to shareholders the sale of all or part of the
company," Mr. Nelson said.
He declined to say if more companies have expressed an interest in buying Geac.
Geac's financial results should improve in the third quarter because of the restructuring and the seasonal upswing in
software sales during the December period, said John Caldwell, the company's interim president and chief operating
officer.
"With the steps we've taken, we're confident that we'll restore the company's profitability, enhance competitiveness, and
adjust our business to the realities of the markets we face," Mr. Caldwell said.
Of the 500 layoffs, a significant number are administrative positions and professional services experts from JBA Holdings
PLC, a unit Geac acquired in September, 1999. Geac plans to complete the layoffs by next month. About 40 per cent of
employees are based in Europe, 10 per cent in Asia-Pacific and 50 per cent in North America, of which 5 per cent are
based in Canada.
Mr. Caldwell also said the company will take a charge of $8-million in the second quarter related to a lawsuit at JBA. The
case goes back a number of years and involved a dispute over royalties from a terminated reseller agreement, he said. An
arbitrator has ruled against JBA and Geac plans to appeal the decision, but the company wanted to be conservative and
report the claim.
Geac also said it intends to buy back 3.1 million common shares, or about 5 per cent of the total outstanding.
In recent weeks, investors have punished Geac's stock after the company said it retained CIBC to consider a possible sale
and warned that earnings would be lower than expected in the first and second quarters. The stock has lost 79 per cent
this year.
Analysts have rated Geac a poor takeover candidate because it holds a hodgepodge of mature businesses that provide
mostly maintenance sales and fewer new software sales. Geac sells enterprise resource planning tools that help firms
integrate planning, marketing and human resources files.
Earlier this month, the company vowed to restructure and return to profitability after announcing the resignation of former
president and CEO Douglas Bergeron, whose departure was highly influenced by the poor performance of Geac's stock
price, Mr. Nelson said. |
