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Technology Stocks : Zitel-ZITL What's Happening -- Ignore unavailable to you. Want to Upgrade?

To: bigg e who wrote (13518)	12/28/1997 4:45:00 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 18263

bigg e, RE: Layoffs. My speculation concerning layoffs is based on statements by management and my own experience. 1. Management Statements. Zitel CEO Jack King stated during the quarterly conference call, on Oct 30, that Zitel would reduce expenses. Then in the 10-Q, dated Dec 19, management wrote that to remain "viable" Zitel had to implement a program to manage cost and expense levels. 2. How do you manage (i.e. reduce) expenses? By cutting advertising? Restricting travel? No! The only way to significantly reduce expenses is to reduce headcount. So the questions are: Will management follow through on their promises to reduce expenses? And what would be the timing of the layoffs? Perhaps Roger is correct and Mr. King is just paying lip service to the need to reduce expenses. But if he is serious, we should expect layoffs in the next few weeks for the following reasons: 1. Very few companies have layoffs during the holidays. Usually they wait until after the new year to reduce headcount. 2. Zitel is expected to announce their quarterly losses around Jan 20th. Most companies planning layoffs, will reduce headcount prior to their quarterly report. Then they can announce that they are taking actions on reducing future losses for the company. 3. The sooner the layoffs are completed, the greater the impact to the bottom line. This is obvious, but to reduce expenses by say $1M per quarter, Zitel needs to reduce headcount by about 40 employees at the beginning of the quarter. Of course, my short position would be better served if Mr. King just kept spending Zitel into nonexistence<G>! rantings & Regards, Bill